WisdomTree Investments has fought back at ETFS Capital Limited and Lion Point Capital's claims that it has "lost credibility with shareholders," calling the claims "numerous false and misleading" in a recent statement.
The asset manager was stung back in March when shareholders ETFS Capital and Lion Point Capital co-authored an open letter to WisdomTree calling for an overhaul of the company's management, recommending a new CEO be appointed.
At the time ETFS owned 10.4% of the common stock of WisdomTree and Lion Point held 3.1%.
WisdomTree has directly responded to the claims in the letter, saying that ETFS and Lion Point abandoned a meticulously planned out cooperation agreement "at the eleventh hour".
The firm said that they had met with Cristiano Amoruso, a partner of Lion Point, 13 times in the previous months "with the goal of reaching a mutually agreeable cooperation agreement that would avert a costly, distracting and unnecessary proxy contest".
They said that the Board met 16 times during the same period to discuss the topic of "potential settlement options and act in the best interests of all WisdomTree stockholders".
Activist investors call on resignation of WisdomTree CEO to 'restore lost credibility'
WisdomTree claimed all parties has reached a "final definitive cooperation agreement" that was due to be announced on Wednesday 4th May, but this was usurped when "ETFS and Lion Point abruptly abandoned the agreement and instead issued an open letter grossly mischaracterizing both the nature of the agreement and the negotiations with WisdomTree".
Frank Salerno, WisdomTree's chair of the board, said that if the agreed deal had gone ahead, it would have been "a win for all investors".
Salerno said they were "shocked" that hours before the scheduled release "ETFS and Lion Point abruptly and irresponsibly discarded the cooperation agreement and announced their intention to engage in a proxy fight".
His shock was added to because he had received a dinner invitation from Lion Point partner, Cristiano Amoruso, just days before the open letter went out, such was the "constructive and positive" of the meetings until that point.
According to WisdomTree, the cooperation agreement included "standstill provisions so permissive that Lion Point would have been able to increase its economic interest in WisdomTree stock from 3.1%, up to 9.9%."
Salerno said: "Amoruso, himself expressed confidence in WisdomTree's business direction and strategies. Unless Lion Point was always negotiating in bad faith, we can only conclude that Graham Tuckwell, the Chairman and CEO of ETFS, deliberately derailed this agreement, placing his own personal agenda above the best interests of other stockholders, including his fellow activist."
The core of ETFS and Lion Point's claim was that WisdomTree had lost its way and needed a new CEO to "guide WisdomTree so that it can regain its best-in-class company status in its industry while generating significant value for all stockholders".
Martyn James, managing director at ETFS Capital responded to the press release, stating: "The obvious question which needs asking is; if, as the Company states, the changes proposed by the aborted co-operation agreement would so clearly be in the best interests of its stockholders, why did the Company not instigate those changes of its own volition, long before now?"
Further on in the press statement, WisdomTree said it was staying "true to its word" and still offered Lynn S. Blake, who was nominated by both ETFS and Lion Point, a seat on the Board.
This had been one of the points in the agreement, a "Board refreshment".
WisdomTree commended Blake, saying that they recognised her "relevant experience and collaborative spirit". Her appointment will be pending approval until voting at the 2022 Annual General Meeting (AGM).
But WisdomTree did not accept ETFS and Lion Point's second nomination, Deborah Fuhr, ETFGI managing partner and founderd, on account that she "has significant conflicts of interest that disqualify her as a suitable candidate for the Board".
They added: "Lion Point was very ready to concede her conflicts at this point, swiftly dropping Fuhr and substituting only the right to name another director at a later point."
They also claimed that the Board did not interview Graham Tuckwell, founder and chair of ETFS Capital, for the role on the grounds that he had "already determined on numerous occasions that he does not have the necessary temperament or qualifications to join the WisdomTree Board", something they said, "Lion Point did not dispute".
They added that Tuckwell also had "significant, unresolvable conflicts of interest" which disqualify him for a Board seat.
"ETFS and Lion Point claim they ‘nominated three extraordinarily qualified directors,' who were apparently so extraordinarily qualified that two of the three nominees were discarded without a second thought by the dissidents themselves during negotiations as soon as WisdomTree noted their massive conflicts," WisdomTree said.
Wisdom continued to lambast Tuckwell, claiming that he personally derailed the agreement "solely to advance his personal agenda", stating since he became a shareholder in 2018 he has been "driven by his outsized ego and personal animosity towards WisdomTree's Founder and CEO, Jono Steinberg, and has insisted that only he, Tuckwell, can lead this Company."
The ETF specialist expressed that they remained "confident" in Steinberg's leadership and his management team.
In the days prior to the agreement being announced, WisdomTree claim Tuckwell insisted on speaking individually to Steinberg and Salerno separately without Lion Point, something Salerno personally confirmed.
During those conversations they said he "made clear that he felt he had been, in his own words, ‘sidelined' during the negotiations between Lion Point and WisdomTree.
"Tuckwell has only participated in one of the numerous settlement conversations."
WisdomTree state that "Lion Point chose to exclude Tuckwell from subsequent conversations", after acknowledging some several occasion that constructive conversations "were not possible with Tuckwell present and that discussions with him were like ‘getting into a cage with a tiger'".
Salerno himself attested that Tuckwell was gunning for Steinberg to step down, "even though his counterpart at Lion Point had never even met him."
He said: "If anyone was operating in bad faith, it was Tuckwell […] He has once more demonstrated his lack of fitness to serve as a director of this or any other public company."
Tuckwell responded to WisdomTree's accusations, stating: "The fact that they are having to resort to personal attacks against me shows that the Board have no arguments of substance to defend the underperformance of the Company. I, therefore, do not intend to respond".
In conclusion, the asset manager claimed that overall "the statements about WisdomTree's business in the open letter are disingenuous - Amoruso explicitly expressed confidence in WisdomTree's strategy and business direction throughout the negotiation process. The facts are clear."
Lion Point has been contacted for comment.
