(Reuters) - A U.S. judge has rejected Rockwell Medical Inc's RMTI.O request to block two investors who have launched a proxy fight against the biopharmaceuticals company from soliciting shareholder votes ahead of its June 1 annual meeting.
Wednesday’s ruling by U.S. District Judge Robert Cleland in Detroit marked a victory for David Richmond, chairman of wealth management firm Richmond Brothers Inc, and investor Mark Ravich, who they nominated for a seat on Rockwell’s board.
Richmond Brothers and Ravich together with their affiliates own 11.7 percent of the company’s outstanding common stock. Rockwell has been fighting Ravich’s nomination.
“The ruling makes clear that shareholders will be afforded a full opportunity to cast their votes as they deem appropriate,” Richmond and Ravich said in a joint statement on Thursday.
A spokesman for Rockwell did not immediately respond to a request for comment.
In a lawsuit filed in March, Rockwell said Richmond and Ravich had since February 2016 been acting in concert to acquire and hold voting shares as part of a campaign to wrest control from Robert Chioini, its founder and chief executive.
The lawsuit said in doing so, the investors violated a U.S. Securities and Exchange Commission regulation by failing to register as a shareholder group at the time, something they ultimately did in February 2017.
Wixom, Michigan-based Rockwell contended the filing with the SEC was not only late but misrepresented the number of shares over which the defendants had the ability to direct the vote.
The company sought an injunction requiring Richmond and Ravich to file a corrected group registration with the SEC and to prohibit them from soliciting shareholder votes to provide a “cooling off” period so investors could digest the information.
In his decision, Cleland said Rockwell’s request that he require the investors submit a supplemental filing with the SEC regarding their voting power had been mooted after they submitted a new filing that addressed that issue.
Such an order, he wrote, “might result in substantial harm to Defendants and shareholders by inducing a loss of a board election by an insurgent shareholder group that could otherwise have won.”
The judge said the evidence to date also did not suggest Rockwell would ultimately be able to succeed in proving the investors had formed a shareholder group before February 2017.
The case is Rockwell Medical Inc v. Richmond Brothers Inc, et al, U.S. District Court, Eastern District of Michigan, No. 17-10757.
Reporting by Nate Raymond in Boston; additional reporting by Michael Flaherty in New York; editing by Grant McCool
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