Alan Casden on the Short End In Latest Skirmish With Brother
WALL STREET WEST
Alan Casden got the worst of a legal split decision this month when an L.A. Superior Court jury ruled in favor of his older brother Henry in the second round of a four year-long civil suit.
Henry Casden, former president of Casden Properties LLC, originally had sued the real estate mogul to recover part of his severance and at least $225,000 in unpaid dividends from his stake in a Casden-controlled partnership. Alan Casden won the original jury trial, but a state appellate court overturned the verdict two years later, concluding that the jury was wrongly instructed on how to decide the case.
This time around, the jury awarded Henry Casden $5.5 million, including severance, unpaid dividends and the value of his stake in the Casden partnership.
It wasn’t an all-out victory for Henry Casden.
The jury found for Casden Properties, which Alan Casden controls with an affiliate of New York investment house Cerberus Capital Management, on its claim that Henry breached his fiduciary duty by signing a three-year employment agreement without disclosing that he had been diagnosed with diabetes. Casden Properties was awarded $1 million in damages as a result.
In addition, a judge decided to set aside Henry Casden’s more recent claim that Alan owed him $4 million in unpaid bonuses plus interest earned during his 11 years as Alan’s right-hand man. That could have totaled out to $9 million in damages according to Alan Casden’s attorney, Tom Nolan.
“We’re disappointed with part of the verdict, but Henry can’t feel too happy that he was just found liable for violating his fiduciary duties to a company,” said Nolan.
Henry Casden’s attorney, Hillel Chodos, declined comment.
Two Los Angeles-based Northwestern Mutual Life Insurance Co. agents whose travails were mentioned in an Oct. 13 Business Journal story about an NASD investigation have defended themselves in e-mails sent out to co-workers and policy holders.
E-mails purportedly sent by Robert Kerrigan, managing partner at Northwestern Mutual’s Los Angeles office, and Keith Wagner, an agent, were provided to the Business Journal by a policyholder who received the statements.
As reported, investigators with the National Association of Securities Dealers have contacted policyholders who purchased variable life insurance policies from the two agents.
In his message, Kerrigan described the story as “primarily a collection of inaccuracies, opinions and unsupported assertions,” and said he was “appalled at the sensationalism of this story.”
Calls placed to Kerrigan and to Wagner were referred to a spokeswoman for the office Kerrigan heads, which is called Strategic Financial Group. The spokeswoman, Barbara Caruso, said she wasn’t sure whether e-mails were sent outside of the office. However, she did confirm that the company had put together an internal critique of the story.
In his e-mail, Wagner described being “torn between anger and the emotional position of defending my character from an untrue and inflammatory story.”
As reported, a Northwestern Mutual spokesman said the NASD is investigating variable life insurance products industrywide. The NASD has declined comment, but provided documents showing a probe initiated against Northwestern Mutual last month.
Business Journal Editor Mark Lacter said the newspaper had not received any complaints about the story.
Pension fund investors are watching with particular interest the case of Santa Monica-based Wilshire Associates Inc., whose short-term “market timing” trades dating back to 1993 are being examined by the SEC.
The question, said one money manager familiar with such practices, is whether Wilshire’s in-and-out trades in mutual funds violated the internal procedures of some of its fund-company clients, which publish the provisions against the practice in their prospectuses.
Many mutual funds also impose penalties to discourage market timers. “It does hurt investors,” said the money manager. “But unless you have a provision, it’s not illegal.”
The SEC is reviewing investments Wilshire Associates made for its clients and for its own accounts that involved buying selected mutual funds and simultaneously selling short equity index futures contracts to profit from changes in the spread, according to a statement issued by the company last week.
Wilshire, the second-largest pension consulting firm, said in the statement that it doesn’t believe its conduct violated any law, and that decisions regarding implementation of the strategy were made “independent of the consulting and the analytics divisions of the firm.”
A spokeswoman for the firm declined further comment.
PGP Capital Advisors, a boutique Los Angeles investment banking firm that was formed last year, advised MultiCultural Radio Broadcasting Inc. of New York on the $150 million purchase earlier this month of 15 radio stations from Radio Unica Communications Corp. of Miami. The deal was part of a pre-packaged bankruptcy filing by Radio Unica.
Multicultural Radio owns six stations in Los Angeles, including Korean-language KYPA-AM (1230) and three Pasadena-based stations in Cantonese and Mandarin, KAZN-AM (1300), KMRB-AM, (1430) and KMNY-AM (1600). The acquisition of Radio Unica’s 15 stations includes KBLA-AM (1580) in L.A., bringing Multicultural’s total ownership to 49 stations.
Stewart Kim, PGP Capital’s managing partner, said the deal dovetailed with his firm’s niche of advising minority-owned business, particularly Korean-American firms.
GE Capital Corp., a General Electric Co. unit, owned Radio Unica’s revolving credit line. It will be paid $20 million while the firm’s bondholders are set to recover $111 million, or 70 cents on the dollar. Warburg Pincus owns 60 percent of Radio Unica, whose shares were trading at 70 cents last week. Other assets of Radio Unica will be sold separately.