Opportunity Partners suing Imperial Holdings to compel them to have their shareholders meeting
BOCA RATON, Fl—Specialty finance firm, Imperial Holdings, Inc.(NYSE: IFT) announced today that Opportunity Partners, L.P., a shareholder currently suing them to compel an annual meeting of shareholders has delivered a demand to hold a special meeting of shareholders on behalf of shareholders.
As previously reported, Imperial postponed its annual meeting of shareholders scheduled on May 17, 2012 because of the company was unable to file an annual report with the Securities and Exchange Commission due to their inability to value their assets associated with the FBI raid in September. The raid was due to an investigation by the U.S. Attorney’s Office for the District of New Hampshire into the company’s life settlement business. The company recently announced a settlement with authorities regarding this matter. The investigation was not into the company’s structured settlement purchasing transactions.
Imperial is working diligently to file its annual report and plans to set a new annual meeting date as soon as possible but could not guarantee that the meeting would take place before the August 20, 2012 deadline.
As part of the settlement, former President and COO, Jonathan Neuman stepped down from the Imperial’s board of directors and is no longer an employee.
Imperial Holdings Announces Resolution to Federal Probe
BOCA RATON, Fla.-- Imperial Holdings, Inc. (NYSE: IFT) announced today that they entered into a Non-Prosecution Agreement with the U.S. Attorney’s Office for the District of New Hampshire (“USAO”) relating to investigation into Imperial’s premium finance business.
Under the terms of the agreement the USAO has agreed not to prosecute Imperial for any crimes in regards to the misrepresentations on life insurance applications. In addition, they agreed not to prosecute Imperial for any potential securities fraud claims related to its premium finance business.
According to the company’s press release,” Imperial acknowledged that, in connection with a portion of its retail operation that began in December 2006 and was discontinued in January 2009, in certain circumstances where Imperial employees were also licensed life insurance agents who wrote the underlying insurance policies, the Company facilitated and/or made misrepresentations regarding premium financing on life insurance applications for elderly individuals and failed to take appropriate precautions to prevent other misrepresentations that may have been made on life insurance applications by employees, prospective insureds and external agents and brokers. “
As a result Imperial of the agreement Imperial will pay a penalty of $8 million. The agreement does not resolve the investigation of the company by the Securities and Exchange Commission. In addition, the shareholder lawsuits stemming from when the stock plunge after the FBI raid still continue.
Imperial also announced today that it has terminated the employment of President and COO, Jonathan Neuman. Mr. Neuman had been on a leave of absence from his position since January 30, 2012 has stepped down from the Imperial’s board of directors and is no longer an employee.
Imperial’s stock rose 32% today after the announcement. Chairman and Chief Executive Anthony Mitchell stated that the company plans to focus strictly on traditional life settlements and structured settlements.
The dark cloud that seems to be following Imperial
Imperial Holdings (NYSE: IFT) seems to have a dark cloud hovering over its Boca Raton, FL offices. Since going public back in 2011, the company has been plagued with legal problems, shareholder turmoil and increased competition in the marketplace. In addition, their stock is currently trading at $2.87, 73% less than its 52-week high.
According to a press release by competing structured settlement factoring company RSL Funding, LLC, Texas courts have rejects Imperial Finance’s repeated attempts to stifle competition. RSL claims that Imperial sought to prohibit customers from receiving competitive bids for their structured settlement payments. The facts surrounding the case as well as the April 24th press release could not be confirmed.
In a recent amended SEC filing, Opportunity Partners is demanding to inspect and copy records in order to determine the value of their shares. Opportunity Partners also wants to determine if there is any corporate waste and assess the performance of Imperial’s officers.
According to the filing, Opportunity Partners is requesting the following:
- Invoices and records relating to the total amount of expenses incurred to date in connection with any internal investigations commenced since September 27, 2011.
- Minutes of any board or committee meetings in which possible or actual wrongdoing by anyone employed by or connected with Imperial was discussed.
- Documents relating to the anticipated total cost of the internal investigations or their anticipated completion date.
- Documents relating to the cost of defending the shareholder class action complaints.
- Documents relating to Imperial's current cash balance.
This filing came the day after, Bulldog Investors, filed a “preliminary proxy statement containing contested solicitations” to hold a special meeting to change the amount of board members, elect five new directors and make alterations to the current bylaws.
Previously, Bulldog Investors demanded the resignation of two independent directors from Imperial’s board. Imperial announced on March 19th that they could not file their annual report due to their inability to value their assets because of the FBI raid in September. The raid was due to an investigation by the U.S. Attorney’s Office for the District of New Hampshire. As a result of the raid, shareholders filed class action securities fraud lawsuits against them.
Imperial Holdings signed a severance agreement with CFO and Chief Credit Officer Richard O’Connell Jr. on February 15, 2012. O’Connell will receive his base salary for 24 months and additional bonuses. The company announced that they are a target of a SEC investigation in connection with the company’s premium finance business.
In January, Jonathan Neuman took a leave of absence from his duties as COO and President.
Imperial Holdings had previously announced that the investigation was into its life settlement business not its structured settlement business. Imperial has denied any wrongdoings and no other company officials besides Neuman are being targeted in the probe.
More investor problems for Imperial Holdings
Boca Raton, FL—On March 21, 2012, Bulldog Investors submitted an Amended Statement of Beneficial Ownership for Imperial Holdings, LLC (NYSE: IFT). The enclosed documentation contained a letter from Philip Goldstein of Bulldog Investors detailing the latest in Imperial’s shareholder saga.
As previously reported on March 2, 2012, Bulldog Investors sent a letter to Imperial Holdings about their ongoing cash drain from their massive legal spending. In addition, the letter wanted at least two independent directors to resign from Imperial’s board to be replaced with directors who had significant ownership.
On March 9, 2012, Michael Altschuler, Imperial's General Counsel replied to Bulldog Investors stating the board was not able to provide a response. As a result, on March 14, 2012, Bulldog Investors served Imperial with a complaint filed in Palm Beach County compelling the company to hold its annual meeting.
Imperial announced on March 19, 2012, that they could not file their annual report and would have to reschedule the annual meeting.
In the most recent Bulldog Investments letter, Goldstein states that they believe the cancelation of the annual meeting is an attempt by the “independent directors to delay their inevitable ouster.” The letter also informs the company that their affiliate Opportunity Partners. L.P., plans to nominate the following directors to the board Antony Mitchell and Jonathan Neuman, the two interested directors, and Gerald Hellerman, James Chadwick, Richard Dayan, Andrew Dakos, and Phillip Goldstein to be independent directors.
In addition, the plan to introduce a proposal stating that any settlement between Imperial and a government agency for more than $1 million needs to be ratified by Imperial’s shareholders.
Currently Jonathan Neuman is on a leave of absence from the company and Antony Mitchell has been assuming his duties. No announcements regarding Neuman’s return as well as Imperial’s legal troubles or their shareholder class action lawsuit at this time.
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