Hedge fund claims smear tactics used in Tenga proxy battle
One of the contenders in the hotly-contested Tegna proxy battle says it’s been smeared with false accusations of improper trading in a blatant attempt to manipulate this week’s vote for a new board of directors.
New York-based hedge fund Standard General sued Tusk Strategies Tuesday in Manhattan federal court, accusing the political consulting firm, of “blanketing the media with false and misleading proxy materials” on behalf of a “secret client.”
Tegna, based in Tysons, Virginia, is a broadcast and digital media company that owns 66 stations in 54 markets. It has been locked in a monthslong battle with Standard General, its largest shareholder which owns 12% of the company. Standard General is seeking four board seats. A vote is scheduled for Thursday.
The coronavirus threw a wrench into the proxy fight as face-to-face meetings with key investors were replaced with phone calls as the virus spread, according to people familiar with the matter, who asked not to be identified because the procedures are private.
An employee of Tusk sent an email to news outlets Friday to try to get them to write stories about a lawsuit in which Standard General is accused of improperly profiting from short-term trades, the hedge fund said. In the lawsuit, filed by an investor, Standard General and its chairman, Soohyung Kim, were accused of making almost $800,000 by selling Tegna stock while the proxy fight was “raging.”
Standard General denied any wrongdoing and described the investor lawsuit as “frivolous.” It’s asking the court to order Tegna to file SEC proxy statements, reveal the name of its client and retract its “false and misleading statements.”
“As of the date of this complaint, the proxy contest hangs in the balance,” Standard General said in its complaint. “Tusk’s reasons for pursuing this malicious and defamatory article are obvious: a story accusing Standard General and Mr. Kim of a crime would likely be a knockout blow to Standard General’s prospects in the proxy contest.”
Tusk didn’t return a request for comment.