WILMINGTON, Del. (HedgeWorld.com)–Russell D. Glass filed a lawsuit against Ranger Entrepreneurs LP, a partnership controlled by Dallas-based shareholder activist Samuel E. Wyly, which was set up to develop an innovative “complex” of corporate governance-oriented hedge funds.
Mr. Glass, an investment manager formerly associated with Carl Icahn, had joined in a joint venture with Ranger only five quarters before,
The complaint, dated April 8, prepared by Joel Friedlander, a partner in Bouchard, Margules & Friedlander, Wilmington, Del., states that Mr. Wyly induced Mr. Glass to form a joint venture for the purpose of creating hedge funds that would invest in corporate equities and debt, seeking to unlock value locked up by inadequate corporate governance. The complaint charges, furthermore, that Mr. Wyly “misappropriated business opportunities … and engaged in business extortion in an effort to gain economic advantage over Glass.”
K. Scott Canon, a spokesperson for Mr. Wyly, declined to comment on the lawsuit Wednesday.
Ranger Entrepreneurs, as Mr. Wyly’s corporate vehicle, entered with Mr. Glass into a principals’ agreement in January 2002, specifying that both parties would have to agree on all material decisions related to the fund’s complex. In reliance upon this contract, Mr. Glass resigned his position as president and chief investment officer of Icahn Associates Corp., New York.
In its brief life, the joint venture has established four hedge funds, two Delaware entities and two offshore. The agreement allocated to Mr. Glass and Ranger, respectively, 60% and 35% of the economic interest in this funds complex, with the remaining 5% reserved for employees and others.
In a separate (oral) agreement, Mr. Wyly allegedly undertook to pay Mr. Glass approximately US$3 million if he entered into an agreement with his former employer, Icahn, resolving certain outstanding issues between them. Mr. Glass did so.