Sometimes, it appears, it's not so good to be the king.
In a decision handed down late last week, a New York Supreme Court in White Plains, N.Y., ruled that two original investors of Mario Gabelli deserve a shot at recouping millions of dollars they say the mutual fund giant bilked from them over the years.
The decision comes as Gabelli faces a separate lawsuit from the Federal Communications Commission.
The New York judge, Linda S. Jamieson, ruled that Gabelli unfairly prevented investors Frederick J. Mancheski and David M. Perlmutter from selling their stakes in Gabelli Group Capital Partners, the private company and controlling shareholder of Gamco Investors. They also allege that Gabelli siphoned money from the company to himself and his family, which further deprived them of returns.
The trial's outcome should not impact Gamco, a report from The New York Times indicated. But it should pave the way for the investors to sell their shares, which they bought for about $75,000 some 30 years ago and could be worth upwards of $100 million today.
A Gabelli spokesman told The Times that "we disagree strongly with the claims by the plaintiff" and that they "welcome a hearing on the outstanding issues." The spokesman further indicated that the firm supports the desires of Mancheski and Perlmutter and has offered assistance in finding a buyer for the shares.
It's also possible, according to the judge's notes, that a trial would favor Gabelli. She noted that just because an action might benefit Gabelli and disadvantage the investors, it's not necessarily evidence of a breach in his fiduciary duty.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.