SpongeTech Says Ex-Hedgie, Reporter Conspired Against It

Apr 27 2010 | 2:37am ET

SpongeTech, whose commercials flogging soap-filled sponges once filled the airwaves, has been on the receiving end of some unpleasant legal actions in recent months. Now, the company has seized the mantle of “plaintiff” for a lawsuit of its own, targeting a wunderkind former hedge fund manager and a well-known Wall Street reporter.

SpongeTech last week accused Timothy Sykes, New York Post reporter Kaja Whitehouse and blogger David Patch of conspiring to drive down the company’s stock price to benefit short sellers, HedgeFund.net reports. According to the lawsuit, filed in Manhattan state court, Patch copied Whitehouse on complaints about SpongeTech he sent to the Securities and Exchange Commission—which in December told the company is was preparing an enforcement action against it.

As for Sykes, SpongeTech alleges that Whitehouse’s use of the Cilantro Fund Management founder, who now advises on pink sheet trading, as an expert in her stories is evidence of the conspiracy.

SpongeTech did not say who, exactly, profited from the alleged short-and-distort scheme, although it did specify precisely $18 million in damages. The company is also seeking $25 million in punitive damages.

The Post is also named in the lawsuit.

It may need that money: In addition to its pending SEC trouble, SpongeTech has been sued by a series of companies it advertised with, including CBS Radio, Madison Square Garden and the New York Mets.


In Depth

David Yarrow On Growing His Hedge Fund And Shooting The Animals And People Of Africa - As A Photographer

Jul 23 2014 | 6:44am ET

While he’s always been a photographer, recent expeditions to Iceland, Ethiopia...

Lifestyle

Einhorns Busts At WSOP, Finishes In 173rd

Jul 15 2014 | 10:48am ET

Greenlight Capital founder David Einhorn’s World Series of Poker won’t end at...

Guest Contributor

The Truth About Track Record Portability

Jul 24 2014 | 5:55am ET

The number of private funds converting to mutual funds has increased significantly...

 

Sponsored Content

    Northern Trust Helps Hedge Funds Navigate Derivatives Regulations

    Jul 8 2014 | 10:48am ET

    The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…

Publisher's Note