Bank of EastAsia Ltd. vowed to strongly oppose 's"unfair prejudice petition" in the Hong Kong court, claiming that theU.S. hedge fund's intention is simply "to put the bank in play."
The Hong Kong-based lender was responding to Elliott'slawsuit over alleged unfair conduct on the part of the bank's directors andserious governance failings. In itspetition, the activist hedge fund accused Bank of East Asia's directors of"prejudicial conduct" and governance shortcomings that resulted inthe entrenchment of management control over the bank at the expense of minorityshareholders, according to Reuters.
The lawsuit was filed in connection with Elliot's with the bank'smanagement over the sale of new shares to Japan's Sumitomo Mitsui Banking Corp. in 2014. Elliot also hadfiled a suit in 2015 arguing that the sale diluted the stock of existingminority investors and that the bank should have conducted a rights issue if itwanted to raise capital.
In its July 18 statement, the bank also defended its sale ofshares to Sumitomo Mitsui Banking, saying its board debated the share sale onat least four separate occasions before making the final decision. The banksaid it believes the hedge fund's "petition and conduct are contrary tothe interests of the bank and its shareholders."
The suit came months after the hedge fund for a sale of the bank earlierthis year, saying in a letter to shareholders that mismanagement of the bank'sbusiness had led to its weak performance and poor returns for minorityshareholders. The bank, however, quickly rejected the fund's call for a sale.