Alden Global Capital in Pension Pickle with Department of Labor

The Department of Labor is investigating a media-owning hedge fund on charges of channeling employee pension plan money into fund-affiliated investment vehicles.

Alden Global Capital, a controlling stakeholder of MediaNews Group (MNG, formerly known as Digital First Media), allegedly took almost $250 million in employee pension assets and shunted the money into its own accounts over the past several years. This caught the eye of the DOL, which issued subpoenas to the firm and its partners last year, reports The Washington Post.

The business consists of more than 100 local news and information websites which include The Los Angeles Daily News, The Denver Post, and The Know.

The Labor Department is targeting investment decisions of Alden’s pension management, which falls under the Employee Retirement Income Security Act(ERISA) laws aimed at protecting pension assets. The law requires that retirement funds be invested with the best interest of the retiree in mind, not the fund’s managers.

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Labor Department filings dating back to 2013 show that pension assets from various MNG publications have been invested in two of Alden’s Cayman Islands-based funds, the Post writes.

Alden has owned a majority stake in the publisher since 2010, when it was emerging from bankruptcy.

The investigation also creates a problem for the hedge fund’s current plans to acquire Gannett, the largest daily newspaper company in the US. Gannett’s 100-plus brands include USA Today and the Courier News in New Jersey. Gannett opposes the buyout offer. MNG has launched a proxy fight to win seats on the Gannett board.

The firm has faced criticism about its reputation for buying a publication, only to quickly cut jobs and sell the real estate.

In its annual meeting letter, Gannett said MNG wants to buy the business though a “problematic, two-pronged approach.” First, it “demanded that Gannett sell itself to MNG.” Then it wants “a control slate of candidates, all of whom are affiliated with MNG and/or Alden, to stand for election to the Gannett board.”

Reminiscent of how “Star Wars” character Lando Calrissian laments on how his deal with Darth Vader is “getting worse all the time,” Gannett said the overhanging media company’s stipulations “exhibit obvious and significant conflicts of interest.”

MNG representatives have denied any wrongdoing in relation to the pension pickle.

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Tags: Alden Global Capital, Hedge Fund, Media News Group, Pension, United States Department of Labor (DOL)

CBS and former Chief Executive Officer and Chairman Leslie Moonves have fired back at accusations that they failed to disclose information they knew would affect the company’s stock price in legal briefs in response to a shareholder lawsuit.

The lawsuit, which was filed by the Construction Laborers Pension Trust for Southern California in August, accuses CBS of making “materially false and misleading statements” regarding the company’s business, operational, and compliance policies. It said the company failed to disclose that executives had engaged in widespread workplace sexual harassment at CBS. And in February, the plaintiffs filed an amendment to the lawsuit that included accusations of insider trading among the media company’s executives.

In the most recent brief filed by CBS and Moonves, the defendants said that the lawsuit “improperly relies on an incomplete internal investigation and newspaper articles about the #MeToo movement to imply that otherwise dubious allegations regarding decades-old personal conduct somehow are the makings of securities fraud.”

The brief also said it is “implausible that Moonves could have foreseen his departure from CBS at the time of the alleged statements,” adding that this argument “relies on Moonves’s supposed knowledge of mere allegations of past wrongdoing, largely unconnected to CBS.”

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Moonves maintained in the brief that the allegations against him of misconduct more than a decade ago are not true, and that he did not act improperly.

“Thus, at the time of Moonves’s statements, he had no reason to believe his departure was imminent,” said the brief, “and, in fact, he believed the truth of his statements.”

The February complaint filed by the pension fund said Moonves reportedly knew about a criminal investigation into sexual assault allegations against him as early as November 2017, and believed by early December 2017, “that an article about him would be published imminently” that could detail accusations of sexual misconduct and assault.

The plaintiffs said Moonves and other executives sold tens of millions of dollars worth of stock between mid-December 2017 and May 2018, adding that the timing and amount of the stock sales were “unusual and suspicious.”

According to CBS’ annual proxy statement, which was filed last week with the SEC, Moonves forfeited $34.5 million in company stock awards in 2018 as part of the settlement agreement when he left the company amid sexual misconduct allegations against him.

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Tags: CBS, Construction Laborers Pension Trust for Southern California, Lawsuits, Leslie Moonves, Pension, SEC