Funds News

Hedge fund Steel Partners seeks to dismiss Icahn suit

BOSTON, Jan 28 (Reuters) - Steel Partners this week asked a Delaware court to dismiss a lawsuit filed against the hedge fund firm by billionaire investor Carl Icahn, saying he is “looking for a scapegoat” for investment losses that happened as the financial crisis deepened.

Steel Partners said the suit, which claims it committed fraud, has no merit.

The court papers were made public on Tuesday.

Two weeks ago ACF Industries, a railcar component maker closely associated with Icahn, sued Steel Partners in Delaware Chancery Court, saying the fund firm failed to properly inform investors about plans to turn one of its funds into a public company.

“Because it is so obvious that plaintiff’s claim boils down to nothing more than one for an award of $15 million in damages (at the absolute most), plaintiff’s motion is so utterly without merit as to be frivolous and worthy of sanctions,” Steel’s lawyers wrote to the court.

Icahn’s ACF Industries claimed that Steel Partners was not in compliance with its obligations to investors as it pursued its plan to become a publicly traded partnership because it failed to give ample notice of the plan or an opportunity to vote on the proposal.

After simmering in private for some time, the matter received public attention this month when Icahn filed his suit and followed up last week with a public plea to other investors to join his cause.

Just three years ago Icahn and Steel Partners worked together as allies in pressing South Korea's top tobacco maker KT&G 033780.KS to increase corporate value. (Reporting by Svea Herbst-Bayliss, editing by Maureen Bavdek)