Standard General Head Accused Of ‘Short-Swing’ Stock Move

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Updated at 8:10pm Eastern to reflect new information regarding the source of the plaintiff’s filing against Standard Media and Soo Kim.


On Thursday morning at 8am Eastern, a pivotal annual shareholders meeting will begin in a virtual format for broadcast TV station owner TEGNA.

The meeting will see shareholders make a choice between a gold proxy card, a vote of confidence for TEGNA’s board of directors, or a white proxy card, which would give an affirmative nod to four nominees offered by major shareholder Standard General — Colleen Brown, Ellen McClain Haime, Deb McDermott and Soohyung Kim.

The pre-election tit-for-tat between TEGNA and Standard General has reached a fever pitch, with each group attempting to use the trade press to curry favor among shareholders. Now, Soo Kim has allegedly engaged in “short-swing trading” — something incorrectly referred to as “insider trading” by what was originally believed to be a representative of the plaintiff’s attorneys.

Upon further review, the source, Tusk Strategies, is a communications firm that takes on activists on behalf of corporate management. This suggests that TEGNA itself may be tied to the efforts of the shareholder.

On April 22, Donna Ann Gabrielle Chechele, through attorney James Hunter of Hunter & Kmiec, sued Kim and Standard General in a New York federal district court in what is formally called a “complaint for recovery of short-swing profit” under 15 U.S.C. § 78p(b).

In the lawsuit, Chechele alleges that in August and September 2019, Standard General purchased stock and derivatives in TEGNA that gave him 10% of the voting rights of the company, in stock and equity derivatives.

Then, in January 2020, Kim announced his intent to replace four members of the TEGNA board of directors with members of his own choosing.

This has been established as fact. So, what is Chechele’s suit based on?

According to Chechele’s attorney, while Kim and Standard General held 10% of the equity of TEGNA as of the record date to vote the stock in the proxy contest, Standard General had started to “actively sell” 5 million shares of TEGNA stock, or about 25% of its holdings.

“Faced with public scrutiny of his stock sales, Kim then immediately bought back the shares,” Hunter claims.

These stock purchases, and related derivative ownership, in Hunter’s view, subjected Kim and Standard General to SEC jurisdiction as a control person of TEGNA. Thus, he argues, they could not make “swing trades” in the company.

That’s exactly what Hunter says occurred. In March and April 2020, with the proxy battle erupting between Standard General and TEGNA, Soo Kim’s group profited from its sales of TEGNA stock “to the tune of nearly $800,000.”

Some TEGNA shareholders, including Chechele, fought back, assailing Kim and Standard General for attempting “to disgorge their profits.”

The lawsuit filed on behalf of Chechele can be viewed here.

The sale of TEGNA shares was acknowledged April 1 by TEGNA. In a short but blunt statement, the Tysons, Va.-based owner of such stations as KGW-8 in Portland, Ore., and WUSA-9 in Washington, D.C., took aim at a Schedule 13D amendment filed with the SEC by Standard General. It called the filing “troubling” for all TEGNA shareholders. Why? “Just one day after describing itself in a letter to shareholders as ‘the largest active shareholder of TEGNA’ with a 9.7% ownership position, Standard General … disclosed that it sold approximately 25% of its shares shortly after the record date and instead took derivative positions.” This reduced its stock ownership position.

Even so, TEGNA acknowledged that Standard General was able to retain its ability to vote all of the shares it held prior to those sales at the annual shareholders’ meeting.

Meanwhile, Chechele isn’t simply a concerned TEGNA shareholder.

Chechele in January 2016 sued Bluebird Bio, but voluntarily dismissed the lawsuit one month later; it was a “short-swing” trading allegation.

In September 2012, Chechele was a plaintiff in a lawsuit against Morgan Stanley that also sought to recover “short-swing profits.”

Three other cases filed in the early 2010s saw Chechele as a plaintiff.

Asked for comment, a Standard General spokesperson told RBR+TVBR, “All of our trading has been fully transparent and on-the-record, as well as in full compliance with all applicable laws. This is simply another attempt by TEGNA to distract from the fact that we have expanded our ownership.”