A judge ruled against BGC Partners Inc. directors in their bid to dismiss a suit alleging they breached their fiduciary duties in the investment bank's $875 million acquisition of Berkeley Point Financial LLC from Cantor Fitzgerald LP.
Berkeley Point focuses on originating and selling multifamily and other commercial real estate loans.
Plaintiffs alleged BGC Partners Chairman and CEO Howard Lutnick had the company overpay for the deal as he would have benefited from both sides of the transaction, given his 60% economic interest in Berkeley Point. They also alleged board directors Linda Bell, Stephen Curwood, William Moran and John Dalton acted in bad faith when they allowed the deal to go ahead.
In his ruling, Delaware Chancery Judge Andre Bouchard said the plaintiffs' allegations create a reasonable doubt regarding the board's impartiality. He noted Moran, Bell and Curwood have extensive professional relationships with Lutnick, which include sitting on the boards of various Cantor Fitzgerald-affiliated companies.
Bouchard also dismissed defendants' argument that the plaintiffs failed to state a claim for relief.
