Criminal probe casts 2009 Ackman-Target boardroom brawl in new light

Fri Jul 15, 2016 7:06pm EDT
 
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By Ross Kerber

BOSTON (Reuters) - A widening criminal probe casts new light on a bitter defeat hedge fund activist Bill Ackman suffered in his 2009 bid for board seats at U.S. retailer Target Corp.

Target for years has paid proxy solicitor Georgeson LLC to track the votes of its top investors. This week, five current and former Georgeson employees were charged with fraud for using bribes to get advance voting information on proxy battles.

The same tactics cited in the criminal complaint were used to help Target defeat Ackman in 2009, according to a former Georgeson employee turned whistleblower. Ackman, who runs hedge fund Pershing Square Capital Management, failed in the high-stakes battle to install his own slate of directors at Target and change its business direction.

"We knew long in advance who was winning" the Target proxy battle, Carl Clark, the whistleblower, told Reuters in an interview on Wednesday. He said he was fired by Georgeson in 2012 and that he flagged to authorities that bribes were being used to gain advance access on how investors were voting. The details were similar to those in the charges filed this week.

Georgeson has not been charged and said in a statement on Tuesday that it was cooperating with the investigation. A spokeswoman, Rachel Hamilton-Wilkes, declined to discuss details of the case.

Pershing Square executives declined to comment, spokesman Eric Kuo said.

A spokeswoman for the U.S. Justice Department, Christina DiIorio-Sterling, which filed the charges, declined to comment, citing the ongoing investigation.

Proxy solicitors like Georgeson have become more prominent with the rise of activist investors. They help companies assess whether shareholders will vote for or against management recommendations, including who should sit on the board.   Continued...

 
Activist investor Bill Ackman, chief executive of Pershing Square walks on the floor of the New York Stock Exchange November 10, 2015. REUTERS/Brendan McDermid