Last month Alden Global Capital sued Emmis Communications in a New York state court alleging securities law violations. Now Emmis Communications has sued Alden Global Capital in a New York federal court alleging securities law violations.
The allegations, however, are quite different. Alden had claimed it was improper for Emmis to loan money to JS Acquisition, a company owned by Emmis CEO Jeff Smulyan, to fund its lawsuit against Alden for walking away from their joint deal to buy out other shareholders and take Emmis private.
The latest suit, Emmis vs. Alden, charges that Alden engaged in a number of “cash-settled equity swap agreements” in February, March and April 2010 that were improper and resulted in illegal profits by Alden while Alden was a holder of more than 10% of the Class A stock of Emmis. As the company whose stock was being manipulated for the short-swing profits, Emmis claims it is entitled to recover those profits. It is seeking $310,000 from Alden, plus the profits from any other short-swing profits that Alden may have gotten from other short-swing trades that it hasn’t made public.
Alden has not yet filed a response to the latest lawsuit.
Meanwhile, trial in JS Acquisition vs. Alden is tentatively scheduled to take place in July 2012. The jury trial is expected to take 3-4 days to try, according to the case management plan submitted by the parties. Preliminary witness and exhibit lists are due June 3, 2011.