Firm Sues Hedge Fund For Holding Too Much Stock

August 6, 2003 (PLANSPONSOR.com) - Aksys Ltd. has filed suit against Durus Capital Management LLC alleging the hedge fund violated federal securities law and a standstill agreement limiting its holdings of the company's stock when it bought 78% of the shares outstanding.

The biotech company contends its stock has been subject to wide price fluctuations and is danger of losing its institutional investor base since Connecticut-based Durus revealed it accumulated the large stake, according to the lawsuit filed in the US District Court in Connecticut.   Additionally, Aksys says the move by Durus has impaired the company’s ability to raise capital, according to a Crain’s Business report.

Aksys officials contend they were unaware of the purchases until late last month, when Durus reported them to the Securities and Exchange Commission (SEC).   “We would ordinarily learn of a stock accumulation through SEC filings, but Durus failed to make the required filings as it built its position,” says William Dow, Aksys’ president and CEO.

The company is seeking unspecified damages from the Durus and manager Scott Sacane.   The lawsuit also asks that Durus return any profits connected with its purchase and sale of Aksys stock within the last six months.

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