The Morning Brief: Atlantic Investment Takes Stake in Wesco
Alexander Roepers’ Atlantic Investment Management disclosed it owns 5 percent of Wesco International, according to a 13D filing. The New York activist said he has been buying shares since early March, paying between roughly $68 and $72 per share for its stake in the electronics distribution and services company. In its filing, the hedge fund firm known for its AJR and Cambrian Fund says it holds the shares for “investment purposes.” Otherwise, it does not lay out any plans or recommendations, relying on mostly boiler-plate language to say it will monitor the performance of the company. It will be interesting to see where Roepers goes with this one.
A California hedge fund firm and two executives agreed to settle Securities and Exchange Commission charges that they engaged in improper use of fund assets to pay operating expenses while their auditor agreed to settle charges of signing off on financial statements despite knowing of the improper payments. The SEC, which can only bring civil charges, found that Alpha Titans, principal Timothy P. McCormack and general counsel Kelly D. Kaeser used private funds to pay more than $450,000 in office rent, employee salaries and benefits without receiving authorization and without disclosing the payments to clients. The SEC says that auditor Simon Lesser knew the hedge fund firm improperly used the assets but still signed off on the audit reports, which contained unqualified opinions that the funds’ financial statements were presented fairly. The SEC also noted that Alpha Titans, McCormack, and Kaeser sent investors audited financial statements that did not disclose nearly $3 million in expenses that were tied to transactions involving other entities controlled by McCormack. Under the settlement, Alpha Titans and McCormack agreed to pay disgorgement of $469,522, prejudgment interest of $28,928, and a penalty of $200,000. McCormack and Kaeser each agreed to be barred from the securities industry for one year, and Kaeser accepted a one-year suspension from practicing as an attorney on behalf of an SEC registered entity. Lesser agreed to pay a $75,000 penalty and to a suspension from practicing as an accountant on behalf of an SEC regulated entity for at least three years. The firm and the three individuals agreed to settle without admitting or denying the SEC’s findings.
Paul Singer’s Elliott Management has backed off on its bid to seek a seat on the supervisory board of German machine-tool maker DMG Mori Seiki, according to Reuters. Elliott, which owns 15 percent of the shares, reportedly said it would nominate a board member if it were asked. Reuters points out that Japan’s DMG Mori Seiki recently bought a 52.5 percent stake in DMG Mori Seiki. Elliott was thought to be trying to attract a higher offer for the company.
Another hedge fund may be emerging from the Carl Icahn stable. Nick Graziano, a partner and senior managing director at Corvex Management, recently left the hedge fund firm founded by Keith Meister to launch his own firm, according to The Wall Street Journal. Meister was once the right-hand man of Icahn before starting Corvex. Graziano, like Meister and Icahn, is planning to launch an activist fund. Graziano joined Corvex in 2010 when the fund was launched. He left Icahn Enterprises in 2006 to work for activist Sandell Asset Management and then moved on to Leon Cooperman’s Omega Advisors.