Gliksberg Goes to Delaware

“I again find in the affirmative that the plaintiff has demonstrated a credible basis to suspect wrongdoing” – Vice-Chancellor J. Travis Laster, Delaware

I know what I’ll be reading in depth tomorrow. Looks like books and records cometh, at some point, to Gliksberg anyway. Big twitter thread above with full access to Gliksberg suit documents.

Gliksberg’s energy and passion (and wallet) for truth is something for which shareholders should be thankful! This is a win for the investor.

Dissident crew’s vote on McGinnis looks pretty good in retrospect!

It seems likely that the holdings of McGinnis were misreprented. Those involved in the misrepresentation (and its ramifications: a board seat) should be held accountable.

12 thoughts on “Gliksberg Goes to Delaware

  1. Fantastic work by Mr. Gliksberg to get to the true facts. I don’t think that anyone, including the members of the Board believe that McGinnis ever owned those shares.

    Thanks on behalf of us small shareholders Mr. Gliksberg.


  2. Solid work, Gaby. I read through all the trial notes last night….. not a legal person but couldn’t help to think that Gaby’s lawyer did a way better job than the TPL lawyers. I like the judge’s Questions…. Wait, help me understand how that is not related?! Or something like that. The opinion at the end looked very favorable for Gaby and team shareholder. I also like how the board was trying to throw in supplemental evidence that was “reviewed” and post dated for after the board met…. How was that reviewed?! Thanks Gaby, very much appreciated.

    Liked by 1 person

  3. I spent a few hours last night and this morning reviewing the case, the briefs, and the trial transcript and decision.

    Long time readers will remember I posted many updates on the lawsuits and countersuits during the 2019 proxy war for filling a directors open seat.

    There is a lot to unpack, so will try (probably unsuccessfully) to keep this short.

    TPL was represented by Sidley Austin, a worldwide law firm with 2,000 lawyers, who consistently is in the top 10 for billings every year. They are big, thorough, and expensive. They represented TPL during the 2019 proxy legal fights. A second firm, Abrams & Bayless was also representing TPL. They are a much smaller firm with a boutique litigation practice around Delaware law.

    Gliksberg was represented by Lowenstein Sandler. Although not as big as Sidley Austin, they are a national firm in several cities with more than 300 lawyers. Also expensive. They represented Gliksberg on the successful de-stagger the board campaign last year. A second firm was on the Gliksberg side, Ballard, Spahr, another large law firm in the hundreds of lawyers across multiple states. They seem to have practice on anything you need with special skills in securities law.

    The case is really very narrow. Dana McGinnis said he was the second largest shareholder (via investment management companies he controlled) which was used in printed materials during the proxy fights. It makes a compelling reason to support his position of voting for Don Cook in the proxy contest. It’s implied his ownership was also a factor on the agreed to out of court settlement between the parties to end the litigation and put Dana and other names on the board of directors.

    Gliksberg’s contention is the various SEC and other filings don’t support the “second largest shareholder” view. His lawsuit was a result of going nowhere in his conversations with TPL management and legal to prove the “second largest shareholder” claim.

    What is readily apparent from reading the various briefs is a legal strategy to answer Gliksberg’s lawyers repeated requests to get to the bottom with specific documents concerning board meetings, and brokerage statements from McGinnis/Mission advisers. What was received was less than complete information, or claims of privilege on the information. There is an amusing “reason” that a major holder of TPL shares at Mission Advisors had died, and it was now impossible to share any of that ownership information.

    A legal strategy when you have a case is to let the facts speak for themselves. But when those facts don’t support your case, its a new strategy to avoid, redirect, misdirect, delay and confuse. TPL and their attorneys seems to have done a masterful job of that as seen by creating sideshow issues like tweets sent by Gliksberg and partial answers and document sharing.

    There is a letter from Don Cook attempting to put this matter to bed, but unfortunately it raises more troubling issues for TPL management and some directed requests for production from the judge. The letter makes reference to the ownership of shares by McGinnis as being “independently verified” without any further context to what that actually means.

    In the end, the key parts of the ruling which I find to be significant are below. These are all from the presiding judge.

    “I again find in the affirmative that the plaintiff has demonstrated a credible basis to suspect wrongdoing”

    “There’s certainly a credible reason to think that the share count of 177,223 was overstated. There is, therefore, a credible basis to think that the company’s use of that share count in the April 2019 letter was incorrect and problematic”

    “The plaintiff has gotten books and records about the board’s subsequent investigation into what the board knew or what the company may have known during the April 2019 when it put out the fight letter. But the plaintiff has not gotten any information into any contemporaneous investigation that management or anybody else did before putting out the April 2019 fight letter. I think it is necessary for the plaintiff to receive informal board-level and officer-level from that time period to understand that topic.”

    “So I think it’s necessary for the plaintiff to have some real time, contemporaneous board-level and officer-level documents relating to that Cook letter to understand what the actual thinking was underneath it.”

    There are some specific requests from the judge for production of documents that are important. I have highlighted a few below from the judge which I believe to be significant.

    “All records reflecting Mr McGinnis or Mission Advisors stock ownership of the company dated on or after January 1, 2019.”

    “All minutes of meetings or other records of meetings of the board or any committee meeting related to any investigation, either formal or informal, by the company, or the board, or anybody retained by the company or the board related to Mr McGinnis or Mission Advisers stock ownership of the company on or after January 1, 2019.”

    Its a vindication of the lawsuit brought by Gliksberg as being reasonable to bring over a statement that potentially by its lack of truthfulness led to Mr McGinnis being on the board. The misrepresentation made to shareholders on a significant factual matter in a contested election has potential SEC implications. Who knew what and when did they know it about this becomes very important.

    Next steps are the parties attorney’s will craft the judge’s findings and decisions into a final order, and clear up any uncertainties from the decision into something the judge will sign. And then both parties will use as the guide for the production of requested additional information from TPL.

    At that point the losing side (TPL) can appeal to the Delaware Supreme Court if they feel major errors have been made in the ruling. Given the narrow scope of the case and the sweeping rulings favoring Gliksberg, there do not appear to be viable appeal paths.

    That said, lawyers are good at finding reasons for appeal, and even if not viable, they do take time to exhaust the possibilities.

    Liked by 2 people

    • Exactly. Thats why I called it an amusing reason to avoid sharing statements proving ownership.

      The skeptic would say its a weak excuse to shield a document that really doesn’t help, but implies that it would prove ownership.

      Gee, so sorry we can’t share it, but otherwise we could prove our case. Nice try. The court didn’t buy it either.

      Liked by 1 person

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