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B&B pays $1 to buy off insider trading allegation

  • 14-11-2006 7:19pm
    #1
    probe
    Closed Accounts Posts: 2,055 ✭✭✭


    Hmmm - why am I not surprized to read this!?

    B&B dishes out $1m to clear claim
    Michael West
    November 13, 2006
    INVESTMENT bank Babcock & Brown has settled a lawsuit against it alleging insider trading, breach of fiduciary duty and misleading and deceptive conduct in its bid for control of Commander Communications.

    A spokeswoman for the bank, which formerly said it had an absolute defence and would "vigorously defend the allegations", said on Friday that B&B had settled to "get it off our plate" and there had been no admission of liability.

    "We elected to settle without admission of liability," said spokeswoman Kelly Hibbins. She said the cost of defending the action had generally outweighed the prospect of defending it.

    Babcock paid "just over $1 million", she said.

    The settlement also covered the same claims that were made against one of the bank's leading executives and architect of the recent acquisition of Irish telecommunications company Eircom, Robert Topfer.

    The claims related to the transactions by B&B in gaining control of local telco group Commander Telecommunications.

    They were brought by Jacqueline Fraser, the wife of Tony Fraser, a major shareholder in Fixed Wire Holdings.

    Fixed Wire owned RSLCOM, the company through which B&B won control of Commander.

    Mrs Fraser has also filed summonses against Adrian Coote, the chief executive of Commander, and B&B's lawyer Watson Mangione in claims related to the first action.

    In the suit against B&B and Mr Topfer, Ms Fraser said a bank subsidiary, Babcock & Brown Transactions, bought her 22.5 per cent holding in Fixed Wire for a tenth of what it was worth.

    She claimed she and her husband did not know that Babcock was negotiating to take over Commander at the time that she was selling her stake in Fixed Wire to Babcock in 2002.

    Ms Fraser sold her shares in Fixed Wire to the bank for $1.23 million, or $27,333 a share.

    Babcock then sold its shares in Fixed Wire to Commander for $300,000 in a transaction that would have valued her shares at $13.5 million. Babcock agreed to buy Mrs Fraser's shares in Fixed Wire in late October 2002.

    Two weeks later, a share sale agreement was made between B&B and Fixed Wire directors Adrian Coote (now CEO of Commander), Carton Russett and Lakshman Mawalagedera.

    Mrs Fraser claimed the other Fixed Wire directors and shareholders knew about the negotiations to sell Fixed Wire to Commander, but she and her husband did not.

    Commander acquired all the shares in Fixed Wire for $60 million in March 2003.

    Babcock and retired Sydney anesthetist Joe Ross were able to wrest control of Commander after Dr Ross built up his stake in Commander from 4 per cent in September 2002 to 17.7 per cent by the end of 2003.

    When Telstra sold its stake in Commander to B&B in July 2003, B&B was able to control Commander with the help of Dr Ross and B&B's control over RSLCOM (through its Fixed Wire stake). B&B later placed its own nominees, including Mr Topfer, on the board of Commander, wresting control from David Coe's Allco group.

    http://www.theaustralian.news.com.au/story/0,20867,20745882-643,00.html

    .probe


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