A high-profile lawsuit seeking to prevent the proposed conversion of Finance Factors Ltd. into a commercial bank was settled Thursday, the day the trial was set to begin.

Terms of settlement are confidential and will not be publicly released.

The complaint filed in March 2007 against parent company Finance Enterprises Ltd. by a group of shareholders—NVC Limited Partnership— including the estranged son of the late U.S. Sen. Hiram Fong, sought the dismissal of six of the 13-member board at the time, including Finance Enterprises' chief executive Russell Lau. Lau was unavailable for comment yesterday.

The same month the lawsuit was filed, three members of the dissident shareholders group of Finance Enterprises, including Fong, were elected to the company's board.

The board met yesterday, but a spokeswoman for Finance Factors didn't know whether there were any changes among its members.

It also is unclear whether the financial-services loan company will move forward with plans for a commercial bank.

“;That was the proposed plan so with this settlement I'm assuming that that's still in the works,”; said Corinne Tanna, Finance Factors marketing manager. “;They haven't really gotten that far yet; they're still trying to work out the details. It's probably too early to speculate what's going to happen going forward.”;

Among the claims in the lawsuit was that directors at the time misused corporate assets, paid themselves excessive salaries while not paying dividends to shareholders, withheld corporate information and blocked shareholders from selling their stock.

Board member James Wright was set to testify yesterday that Lau was aware of illegal activities within the organization, according to court documents.

“;Certainly both parties are happy to see the litigation resolved,”; said plaintiffs' attorney Terry 'O Toole.

Finance Factors, a privately-held loan company created in 1952 by the late Sen. Fong and five other partners, has been exploring a bank conversion since 2003. In 2000, the Federal Deposit Insurance Corp. and the state Division of Financial Institutions issued cease-and-desist orders after an FDIC audit turned up problems in the company's lending practices.

Those orders were lifted in 2001 after Finance Factors appointed new outside board members, improved its internal loan policies, increased its reserves and decreased its share of bad loans.