(Updates with company comment starting in third paragraph.)
Feb. 15 (Bloomberg) -- Tetragon Financial Group Ltd. officers and directors won dismissal of an investor’s lawsuit claiming they used an “abusive scheme” to profit at the company’s expense.
Investor Daniel Silverstein sued officers and directors of Tetragon, the firm’s investment manager and Polygon Investment Partners LLP in July 2011, alleging an “ongoing” scheme to profit at Tetragon’s expense. U.S. District Judge Jed S. Rakoff in Manhattan yesterday granted motions by the defendants to dismiss the complaint, according to a court filing.
In the suit, Silverstein claimed Tetragon’s directors allowed the company to manipulate its net asset values to maximize performance fees paid to its investment adviser. The case was a shareholder derivative suit, which is a claim filed on behalf of the company to enforce legal rights the company’s officers and directors have allegedly failed to assert.
Tetragon, based in Guernsey in the Channel Islands, said in a statement that Rakoff had agreed with the defendants that the “purported shareholder who brought the lawsuit failed to satisfy basic pleading requirements of derivative actions.”
Silverstein, a Pennsylvania resident who has been a Tetragon shareholder since March 2010, hasn’t complied with a court rule that requires a plaintiff in a derivative suit to be a shareholder or a member at the time of the transaction in dispute, Rakoff wrote in his order.
“Even if some conduct that was the basis of the complaint continued to occur after the plaintiff bought his stock, it is clear that he did not own stock throughout the course of activities that constitute the primary basis of the complaint,” Rakoff said in the order.
The case is Silverstein v. Knief, 11-CV-4776, U.S. District Court, Southern District of New York (Manhattan).
--Editors: Fred Strasser, Glenn Holdcraft
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