Investor Raises Novel Theory Attempting to Compel ARS Repurchase

Investor Raises Novel Theory Attempting to Compel ARS Repurchase - 5/20/2009

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HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

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Investor Raises Novel Theory Attempting to Compel ARS Repurchase
Kevin LaCroix

The D & O Diary. May 20, 2009
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EXCERPT: […] In a complaint filed on May 13, 2009 in the Southern District of New York by Monster Worldwide against RBC Capital Markets, Monster raises the novel theory that RBC’s settlement-related offer to repurchase ARS from "eligible investors" is a "tender offer" that RBC must extend to all investors -- including institutional investors like Monster. Between May 2007 and February 2008, Monster acquired $71.6 million of student loan backed ARS from RBC that Monster was left holding when the ARS market collapsed. In October 2008, RBC entered a regulatory settlement in which it agreed repurchase ARS from "its individual customers, charities, non-profits and government entities with less than $25 million on deposit." Pursuant to this arrangement, RBC will repurchase more than $850 million in ARS from "eligible investors." […] On December 1, 2008, RBC initiated an offer pursuant to the settlement to repurchase the ARS from eligible investors. Monster characterizes this repurchase offer in its complaint as a "tender offer," which offer was not extended to Monster and other institutional investors. In its complaint, Monster describes its exclusion from RBC’s regulatory settlement as "arbitrary and unlawful," and alleges that RBC’s limitation of the "tender offer" only to "eligible investors" as a "clear violation" of Section 14(d) of the Exchange Act, giving rise to a claim for relief. Monster also alleges that the repurchase offer violates SEC Rule 14d-10(a)1, the "All Holders" Rule, which provides that "No bidder shall make a tender offer unless … The tender offer is open to all security holders of the class of securities subject to the tender offer." Finally, Monster alleges violations of the securities laws and common law in connection with RBC’s representations regarding the ARS.

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