Amended Counterclaims: Barry’s Election Challenged


Posted to the HK TPL page today.   Thanks to a couple of blog readers for the heads up!  Looks like a big one.  As foreshadowed in White’s “Open the Books!” letter, the group is now officially contesting David Barry’s election.  See excerpt below.

In addition to newly stated facts (highlighted below), counts #2 (page 24) and #7 (page 30) appear to be new causes of action (forgive me if I’m butchering this).  #2 claims breach of Declaration of Trust for ghosting shareholders who came into Dallas to attend the 5/22 meeting.  #7 is a request to get Barry’s election OVERTURNED.

Do we need two new Trustees?

C. The SoftVest Plaintiffs Learn That One Of The Incumbent Trustees, David E.
Barry, Was Never Duly Elected

53. Following the May 22, 2019 special meeting at which Mr. Oliver was elected a TPL
trustee, the SoftVest Plaintiffs learned that one of the Incumbent Trustees, David E. Barry, had actually never been duly elected as a trustee of TPL in the first place.

54. Prior to September 27, 2016, TPL’s three trustees were James K. Norwood, Maurice
Meyer III, and John R. Norris III.

55. On September 27, 2016, Mr. Norwood passed away.

56. On November 4, 2016, Messrs. Meyer and Norris nominated Mr. Barry for election
as trustee.

57. On December 7, 2016, Messrs. Meyer and Norris formally noticed a special
shareholder meeting on January 12, 2017 to elect a new trustee and stated in the notice that only record holders of TPL shares as of December 6, 2016 would be eligible to vote. As of December 6, 2016, there were 7,929,780 TPL shares outstanding.

58. Mr. Barry was the only candidate for the new trustee position.

59. The Declaration of Trust provides that, “[i]n the event of the death . . . of any of the
trustees a successor shall be elected at a special meeting of the certificate holders by a majority in the amount of the certificate holders present in person or by proxy at such meeting whose names shall have been registered in the books of the trustees at least fifteen days before such meeting.”

60. After the meeting on January 12, 2017, TPL claimed that 6,905,319 shares were present in person or by proxy at the meeting, of which 4,421,776 (64%) voted for Mr. Barry and 2,483,543 (36%) voted against him. Horizon Kinetics was one of the shareholders to vote against the election of Mr. Barry. TPL announced that Mr. Barry was elected given that he purportedly received a majority of the votes cast in person or by proxy at the meeting.

61. As the SoftVest Plaintiffs recently learned, however, TPL’s vote count was based a
significant error and improperly included votes that were not legally cast.

62. The vast majority of beneficial owners of TPL hold their shares through brokers,
banks or custodians (“brokers”).

63. Proxy solicitations of beneficial owners are typically made through the broker, which
transmits the proxy statement to the beneficial owners. Instead of sending a proxy card, the broker sends the beneficial owners an instruction sheet that the beneficial owners can return to the broker with voting instructions.

64. Rule 452 of the NYSE, approved by the SEC, comes into play when the beneficial
owner does not instruct the broker how to vote the shares. The rule specifies the conditions under which the broker can vote the shares without having received voting instructions from the beneficial owner.

65. NYSE Rule 452 allows a broker to vote shares held in street name on “routine”
proposals if the broker’s customer, the beneficial owner of the shares, has not provided specific voting instructions to the broker at least ten days before a scheduled meeting. Shares for which no instructions are received are referred to as “uninstructed shares.”

66. But NYSE Rule 452 prohibits brokers from voting shares on “non-routine” proposals,
such as director elections, without specific voting instructions from the beneficial owner.

67. In June 2019, a representative of the New York Stock Exchange confirmed that the
2017 election in which Mr. Barry was a candidate was, at the time, erroneously classified as a “routine” proposal. That representative further confirmed that the election clearly should have been classified as a “non-routine” proposal under NYSE rules. TPL, its trustees, and its agents failed to take corrective action to notify the NYSE when they became aware prior to the scheduled meeting that such mistake had been made, and allowed the “special meeting” to invalidly proceed.

68. The “error” in how the 2017 election was classified greatly inflated the number of
votes cast for Mr. Barry in that election, because it permitted brokers to cast votes on behalf of shares that otherwise would not have voted. On information and belief, but for the error that TPL failed to correct, Mr. Barry would not have received the vote needed to claim an electoral win.

69. TPL has never taken any steps to correct this error. Upon information and belief,
because brokers typically vote in favor of uncontested company proposals, most if not all of the votes that were erroneously cast in 2017 were cast in favor of Mr. Barry; as a result, Mr. Barry did not receive a majority of the votes that were legally cast, and thus was never duly elected a TPL trustee.

10 thoughts on “Amended Counterclaims: Barry’s Election Challenged

    • Most complicated things look simple in retrospect, even when they aren’t. I don’t know how the law will play in this case, but it will be interesting to follow.

      Liked by 2 people

  1. This is epic. Ultimately the Trustees will likely wish that they just would have nominated Oliver. It would seem that we will toss Barry overboard. Hope we can get a two-fer vote and take the majority. I hope once two new trustees are on board they hold the current trustees and/or management personally responsible for the proxy fight costs.

    Liked by 4 people

  2. Maybe Barry’s illegal election is what they’ve been trying to hide,,among other things. The color of Norris’ & Barry’s underwear will be changing son, if it hasn’t already happened. I love watching this unravel.

    Liked by 2 people

  3. I would agree to this compromise: Barry resigns, Oliver elected, new position open and they use that to nominate Stahl or Hodges. What’s amazing is the fact that the current trustees are lawyers, and yet they are getting destroyed at their own game. New appointee must have managements vote and trustees, along with softvest et al.

    Liked by 2 people

    • I don’t know what ‘Mnagement’s vote’ you seek, but it can’t be the two who now serve as General Agents. They are employees and also need to be replaced. Any replacement for Barry MUST have Oil & Gas experience also.

      Liked by 3 people

      • I just mean that softvests nominee would have be guaranteed to have managements blessing. That way, we don’t get into all of this proxy crap again and the company’s pick would be softvests pick. As far as current management, that can be resolved with the new trustees and I’d imagine would be one of their first orders of business if it needs to be.

        Liked by 1 person

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