Dish Chief Seeks End To Harbinger Lawsuit

Sep 11 2013 | 12:24pm ET

Dish Network Chairman Charles Ergen has asked a judge to throw out the fraud lawsuit brought against him by Harbinger Capital Partners, amidst reports that a Dish director resigned over fears of a conflict of interest over Ergen's interest in Harbinger's wireless Internet venture.

Harbinger sued Ergen last month, accusing him of fraudulently acquiring LightSquared's debt to sabotage its own bankruptcy plans. In seeking the dismissal, Ergen turned that argument around, telling a judge that the lawsuit was merely Harbinger chief Philip Falcone's bid to sink Ergen's proposed $2.2 billion deal for LightSquared.

"This case is Harbinger's, and Mr. Falcone's, last-ditch effort to retain control of LightSquared, at the expense of all other constituents in the bankruptcy," Ergen's lawyers said in a court filing.

Harbinger alleges that Ergen used hedge fund Sound Point Capital as a front to buy up some $1 billion in LightSquared debt, and that Sound Point repeatedly ignored its inquiries as to who was behind its "corporate façade." Dish itself is barred from buying LightSquared debt by a covenant that keeps competitors from investing.

But Ergen said that neither he nor Sound Point made any "false representations" about the purchases.

Still, the filing came on the same day that The Wall Street Journal reports that Dish director Gary Howard resigned from its board over fears that Ergen was ignoring concerns about a conflict of interest in Dish's bid for LightSquared. Ergen could personally earn hundreds of millions of dollars on the deal.

Howard, who had served on Dish's board for eight years, was one of two members of the special committee of the board, both independent directors, to recommend the deal. But he quit after the full board disbanded the committee against its recommendations that it be kept involved in the LightSquared bid.

The two members were worried that the deal would look bad for Dish and Ergen, and suggested that Ergen pass some of his profits to Dish shareholders.

Howard did not explain his resignation, a move which would have forced Dish to make a public disclosure.


In Depth

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.