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

Fundraising for Mid-Sized PE Funds: Should You Use a Registered B/D?

Dec 6 2016 | 7:18pm ET

When does a fund sponsor need to use a registered broker/dealer when raising capital...

Lifestyle

Trump Attends 'Villains and Heroes' Costume Party Dressed As...Himself

Dec 5 2016 | 11:16pm ET

U.S. President-elect Donald Trump attended a "Villains and Heroes" costume party...

Guest Contributor

A Hard Look At Your ‘Soft’ Hedge Fund Marketing Information

Dec 8 2016 | 9:03pm ET

Conventional wisdom holds that due diligence examines quantitative as well as qualitative...

 

From the current issue of

Since the inception of Modern Trader, a core editorial theme has centered on the wisdom and power of crowds. Editorial emphasis has focused on companies and projects engaged in the collection and analysis of information. 

AVAILABLE NOW at BARNES & NOBLE

NEWSTAND LOCATOR