Icahn, a limited partner in the Steel Partners II flagship fund through ACF Industries LLC, a company he controls, filed suit against the fellow New York activist hedge fund, accusing it of committing fraud by not advising investors of its plans to take the fund public. Steel Partners, in a bid to save it from paying out cash for redemptions, said it will offer its investors shares in the public entity, WebFinancial LP.
The filing of Icahn's suit was followed by a Jan. 23 open letter to other Steel Partner investors calling for them to meet to discuss their "thoughts and concerns" about Steel Partners' move.
About two weeks had passed since the suit was filed and no response from Lichtenstein, but we did not expect the outspoken activist, who seemingly models himself after Icahn, to take this lying down. And he did not disappoint. Steel Partners on Tuesday pushed for the Delaware Court of Chancery to dismiss Icahn's suit, saying he is "looking for a scapegoat" for investment losses that happened as the financial crisis deepened, according to a Wednesday Reuters report. "Because it is so obvious that plaintiff's claim boils down to nothing more than $15 million in damages (at absolute most), plaintiff's motion is so utterly without merit as to be frivolous and worthy of sanctions," according to Steel's letter to the court, Reuters reported.
Icahn is seeking the $15 million ACF invested in Steel via its employee benefits plan in July 2005 as well as attorney fees and monetary damages. Fifteen million dollars might be small change for hedge fund bigs like Icahn and Lichtenstein, but it could potentially hurt the littler guys' benefits plans at ACF. And while Icahn's battle with Steel may not be based on some charitable need of his to protect Joe Employee at ACF, this does reek of yet another Icahn campaign to preserve corporate governance principles while also preserving his wallet, no matter how small the change. - Michael Rudnick
The battle over a measly $15 million between hedge fund giants Carl Icahn and Warren Lichtenstein of Steel Partners LLC continues.
