Last month, the board of the hedge fund agreed to be acquired by Rithm Capital in a deal that would value the fund at $11.15 per share — a price that is roughly on par with how the firm's stock has traded in the past two years, but down 60% from prices two years ago and down a whopping 96% from the stock's peak price in December 2007, shortly after the firm went public.
Mr. Och and the other signers — Harold Kelly, Richard Lyon, James O'Connor and Zoltan Varga, all former employees of Sculptor – alleged in their letter that there may have been "potential bidders who were excluded from the (bidding) process" and that Sculptor's current management "may have interacted with potential buyers or their representatives to influence the outcome in their favor."
A representative for Sculptor did not immediately respond to requests for comment.
The letter is the latest strike in the ongoing jousting match between Mr. Och and the current leadership of the hedge fund he co-founded in 1994.
The firm has struggled with years of continuous outflows — which began after the U.S. Department of Justice launched an investigation into the business, then known as Och-Ziff Capital Management, in 2014 for bribing public officials in Libya and the Democratic Republic of Congo. In 2016, the firm paid regulators $416 million to settle the charges.
Following the scandal, Mr. Och prepared to step down as CEO but kicked off a nasty succession battle in 2018 by picking an outsider, Robert Shafir, to succeed him over his longtime protegee Jimmy Levin. Mr. Levin, who met the billionaire investor while he was teaching his son how to water ski at a summer camp in Wisconsin, had been Mr. Och's heir apparent since joining the hedge fund in 2006.
After Mr. Och stepped down as the hedge fund's chairman in 2019 and moved to Miami, the fund rebranded as Sculptor. In June 2020, Mr. Levin succeeded Mr. Shafir as CEO of the hedge fund, which kicked off a legal battle between Mr. Och — one of Sculptor's biggest shareholders — and the firm over their decision to appoint Mr. Levin as CEO and pay him what Mr. Och called an "absurd award" of $148.8 million in 2021.
The feud — along with Sculptor's poor performance, which the hedge fund's current leadership blamed on "mismanagement" during Mr. Och's tenure as CEO — forced Sculptor's board to pursue the sale of the fund.