Miami Pension Files Lawsuit Against Carl Icahn over Insider Trading Allegations

The Miami Firefighter Relief and Pension Fund alleges Icahn purchased shares of HP, knowing that Xerox would offer to purchase them later at a premium.

The Miami Firefighter Relief and Pension Fund (MFRPF) has filed a lawsuit against Carl Icahn and his affiliated investment vehicles, alleging they breached their fiduciary duty of loyalty by purchasing $1.2 billion of HP Inc. common stock with knowledge that Xerox was intending to buy the stock at a premium price soon afterwards, subsequently generating a substantial profit for Icahn.

The pension said that Icahn “effectively controls Xerox based upon being its largest single shareholder,” and has been active in his responsibilities, including replacing at least five out of the seven board members, selling subsidiary organizations, replacing the company CEO, and threatening proxy contests.

“Icahn is party to a confidentiality agreement with Xerox pursuant to which he and his affiliates receive non-public information regarding the company,” the pension said.

On April 25, 2019, Xerox CEO John Visentin said during a call with analysts that “we’re never going to comment on the potential targets. But we’re building a deep M&A pipeline that will support our revenue road map.”

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The nonconfidential portions of Icahn’s June 30, 2019, disclosure with the SEC shared that Icahn held no HP common stock at the time. Icahn is the founder of Icahn Enterprises, chairman of Federal-Mogul, a developer of powertrain components, and former advisor to President Donald Trump.

Xerox sent a letter to HP’s board of directors on November 5^, 2019, offering to buy the company for $33.5 billion. HP’s stock jumped from $18.40 to $21.64 per share when news of the offer went public.

The Miami Firefighter’s pension asserts that Icahn breached his contract of confidentiality with Xerox, and deprived the company of the benefit of its bargain by buying such a large amount of shares before the acquisition. “[Icahn was] enriched at Xerox’s expense,” the lawsuit says. “It is against equity and good conscience to permit [Icahn] to retain any profits made, or dividends received, from investing in HP common stock.”

“Permitting [Icahn] to retain the HP common stock [he] acquired and any dividends received appurtenant thereto is unjust, in light of circumstances, under equitable principles of New York law.”

Icahn and affiliated defendants’ ownership of HP common stock rose in market value by approximately $128 million after news of the potential acquisition went public. They were entitled to dividends of approximately $11 million on or about January 2, 2020, bringing their total profits from acquiring HP stock to roughly $140 million.

“The wrongful acts [executed by Icahn] have caused harm to Xerox and will continue to subject Xerox to harm because the adverse consequences of the injurious actions are still in effect and ongoing,” the pension said.

Speculation of insider trading was in part originated when Gordon Haskett analyst Don Bilson said that an activist investor could be targeting HP common stock because of a huge spike in recent trading volume came about despite the lack of an obvious catalyst.

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Tags: Carl Icahn, Florida, HP, Insider Trading, Lawsuits, Miami Firefighters Relief and Pension Fund, securities, Xerox

The University of British Columbia’s board of governors has voted to divest C$380 million ($288.5 million) of fossil fuels from its C$1.71 billion endowment and transfer the money to a sustainable fund.

“UBC acknowledges the urgency of the climate crisis and we must directly face the coming challenges,” University of British Columbia President Santa Ono said in a statement. “At this pivotal moment, the decisions and actions we take today will reverberate beyond our own borders and lifetimes.”

In a “declaration on the climate emergency,” Ono will establish a Climate Emergency Advisory Committee that is “both intergenerational and representative of the diversity of UBC’s community.” The committee’s purpose will be to oversee the community consultation process to ensure that it “incorporates the latest research in science of climate change and adaptation, and the engineering of practical solutions; embeds climate justice; and is inclusive of all members of the community.”

Ono said the committee will consolidate input from both in-person and online consultations into a public report that defines the climate emergency and outlines recommended actions. That should be finished by late spring of 2020. The report will be submitted to the new Sustainability Committee of the university’s board of governors for consideration.

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The board of governors has also agreed to financial and legal reviews of transferring the C$380 million to the university’s sustainable future pool, a fossil-free and low carbon fund established in 2017. The reviews are expected to be completed and presented to board of governors at their April 16, 2020 meeting.

“UBC’s overall investment in the extractive fossil fuel industry is just over 2% (or C$43 million) of the endowment,” university Treasurer Yale Loh said in a statement. “However, as we look at further reducing this investment, we need to consider a variety of important factors.”

Loh said factors include the most effective ways UBC can influence companies to pursue more sustainable approaches, mitigating potential penalties for removing investments from pooled funds that contain fossil fuel securities. Another factor is identifying appropriate alternative funds that are in keeping with the university’s core fiduciary responsibilities.

“UBC is moving forward with a wide-ranging framework to analyze the endowment from a broader sustainability lens with the goal of developing a comprehensive approach to the climate change risk together with other Environmental, Social or Governance issues,” Loh said.

Despite the declaration of a climate emergency, the move isn’t considered enough by university political climate action group UBCC350, which is comprised of students, faculty, staff, and alumni.

“While UBC has made some great strides on climate change, these efforts are deeply undermined because the administration insists on continuing to invest in the full scale of the fossil fuel industry,” the group said in a release. “While we have reached a huge victory in driving UBC to create a C$10 million fossil free fund, we know that divesting less than 1% of UBC’s endowment does not constitute meaningful action on climate change. We are continuing to advocate for the full divestment that UBC students and faculty voted for.”

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Tags: divest, Divestment, Endowments, Fossil Fuels, Santa Ono, University of British Columbia, Yale Loh