Sometimes, it appears, it's not so good to be the king.

A New York Supreme Court in White Plains, N.Y., has ruled that two original investors in funds run by 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.

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 shares that the two investors bought for about $75,000 some 30 years ago could be worth upwards of $100 million today.

A Gabelli spokesman told The New York Times, "We disagree strongly with the claims by the plaintiff [and] 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 a breach of fiduciary duty.

(c) 2006 Money Management Executive and SourceMedia, Inc. All Rights Reserved.

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