Aletheia Research & Management seeking bankruptcy protection
By Randy Diamond | November 12, 2012 3:02 pm
Aletheia Research & Management filed for Chapter 11 bankruptcy protection, court documents show.
The money manager filed its bankruptcy petition Sunday in U.S. Bankruptcy Court in Los Angeles. The company lists assets of between $10 million and $50 million. It also lists liabilities in that same range, according to the filing.
The firm has been the subject of a legal dispute between co-founders Peter Eichler and Roger Peikin. Mr. Peikin was ousted from company management in July 2010; he has filed a lawsuit accusing Mr. Eichler of breach of fiduciary duty and wrongful termination.
Mr. Eichler did not return phone calls by press time.
Brian Davidoff, a partner with Greenberg, Glusker, Fields, Claman & Machtinger, the Los Angeles law firm representing Aletheia in its bankruptcy proceedings, did not return phone calls by press time.
Aletheia lists its biggest creditor as New York-based private equity firm Proctor Investment Managers, saying its owes the firm $16 million. Proctor purchased a 10% stake in Aletheia in 2006.
The second biggest creditor listed is William Mow, a Los Angeles entrepreneur who is owed $5.5 million — $4 million in a revenue-sharing note and $1.5 million in an unsecured loan. Mr. Mow’s daughter, Hillary Mow, joined the firm in 2011 as a research analyst, according to the firm’s website.
The third creditor is the state of California, owed $2.5 million.
Aletheia’s assets have quickly declined. The firm had $1.8 billion in assets under management as of June 30, according to latest filing with the SEC, but had managed $7.5 billion in assets as of March 31, 2011.
Aletheia had paid the SEC $400,000 in fines in 2011 to settle allegations the firm had deficient record keeping.
Aletheia’s board voted 2-1 to file for bankruptcy, according to the minutes of the money manager’s Nov. 9 board meeting that were included in the court documents.
Mr. Peikin, who owns 25% of the company, voted against filing for bankruptcy, saying he was not given advance time to assess the ramifications of the filing. Mr. Eichler and board member Patricia Barnes, senior vice president for trading, voted to approve the filing.
Ms. Barnes is also named in Mr. Peikin’s lawsuit against Mr. Eichler.
In that 2011 lawsuit, Mr. Peikin accused Mr. Eichler of squandering the firm’s money, spending $7 million to renovate its offices, using private jets for travel and staying in $18,000-a-night hotel suites.