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Portfolio > Alternative Investments > Private Equity

Lawsuit Follows Hedge Fund's 'Inadvertent' Takeove

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LINCOLNSHIRE, Ill. (–Aksys Ltd. announced that it has filed a lawsuit against hedge fund Durus Capital Management LLC, Norwalk, Conn., and against its principal Scott Sacane and related parties in federal district court in Connecticut.

The complaint, filed Aug. 5, seeks injunctive relief and damages resulting from the accumulation of 70% of Aksys’ stock in late July in transactions that Durus, in its filings with the Securities and Exchange Commission, has described as “inadvertent.” Aksys also seeks the recovery of trading profits under section 16(b) of the Securities Exchange Act of 1934, the short-swing rule.

In an analysts’ conference call Wednesday morning, company President Bill Dow said that Mr. Sacane has said he will be a passive investor and added that the company has, as of now, no reason to disbelieve that assertion, but he must act to protect the interests of the corporation and its other shareholders.

In a statement, Mr. Sacane said, ” We are committed to our investment in Aksys and believe in the soundness of its long-term prospects.”

Aksys was one of two companies in which Durus, a long/short equity fund with special interest in the biomedical market, acknowledged such an outsized accidental accumulation at the time–the other was Esperion Therapeutics Inc., Ann Arbor, Mich., where Durus now holds roughly one-third of the equity. Aksys offers dialysis-related products. Esperion, which did not respond to a request for comments about its own plans for litigation or otherwise, develops therapies for cardiovascular and metabolic disorders.

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