Mario J. Gabelli smoothed wrinkles in his relationship with some charter investors last week with a $100 million settlement, according to The New York Times.
Frederick J. Mancheski, one of the Greenwich, Conn.-based money manager's first-ever investors, and David M. Perlmutter, a former attorney for Gabelli, accused Gabelli Group Capital Partners, a privately held company established in 1977, of preventing them from selling their stakes in the privately held company at fair market value. In their lawsuit, the pair claimed that Gabelli shortchanged them by only allowing them to resell their shares to his company at a lower book value, or about $50 million.
Gabelli Group Capital Partners is the majority stakeholder in GAMCO, Gabelli's mutual fund company, which is publicly traded.
As part of the settlement, Mancheski and Perlmutter will receive 2.1 million shares in GAMCO, which are valued at approximately $80 million. In addition, they will receive cash settlements of about $20 million.
The settlement skirts a potentially protracted trial and ruling from New York State Supreme Court Judge Linda S. Jamieson. During a late March hearing in her White Plains, N.Y., courtroom, Jamieson said, "There are allegations made against Mr. Gabelli that trouble this court."
"We're very pleased with the outcome of this matter, which resolves the issue in a way that allows us to move forward and directly aligns Mr. Mancheski's and Mr. Perlmutter's interests with those of GAMCO," said Gabelli in a statement.
"I'm also very pleased to have reached this agreement," said Mancheski in the joint statement. "I home to see further growth in the value of GAMCO Investors as I become a major shareholder directly in GAMCO Investors."
The settlement puts to rest this case, but Gabelli still faces Federal civil fraud charges from March surrounding claims he created bogus minority-owned businesses to win millions of dollars worth of Federal wireless licenses and contracts from the Federal Communications Commission. Gabelli has stated he is innocent of the fraud.
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.