Arcturus takes another legal stab at former CEO as public battle turns serious for the company
The bitter and public feud between small RNA medicines company Arcturus Therapeutics $ARCT and its former CEO Joe Payne is raging on Friday, with a brand new lawsuit (yes, another one) launched against Payne and a few of his associates.
In the lawsuit, Arcturus alleges that Payne and his associates Bradley Sorenson, Peter Farrell, and Andrew Sassine (collectively referred to as “the Payne group”) have failed to file certain paperwork with the SEC. Specifically, the lawsuit accuses the group for multiple violations of federal disclosure and reporting rules under Section 13(d) of the Exchange Act and Regulation 13D.
Arcturus says it’s seeking injunctive relief to compel the Payne group to comply with these regulations, but perhaps more importantly, the lawsuit also seeks to prevent Payne and his associates from “continuing to mislead the voting shareholders of Arcturus leading up to the next extraordinary general meeting of shareholders.”
In other words, Arcturus is hoping if it airs Payne’s dirty laundry, then shareholders won’t side with Payne’s proposal to replace the whole Arcturus board with his own appointments.
Payne, the former chief executive who was fired from Arcturus for allegedly putting his own self-interests before the company’s, has been a bit of a thorn in the company’s side over the past couple of months. Payne took the first public swing in the battle royal, claiming that four board members conspired on his ouster. But then Arcturus hit back with its own statement, even as it complied with Payne’s request to vote on new board members.
Then late last month, the drawn out fight took a nasty turn when Arcturus launches its first lawsuit against Payne, seeking damages and injunctive relieve and detailing Payne’s multiple alleged misconducts. Those included operating a “lucrative side business during business hours” and attempting to transfer Arcturus’ IP for no apparent reason during his tenure, in addition to orchestrating a move to block Arcturus’ routine auditing activity.
But things are starting to get real for Arcturus, it says, as Payne’s actions could have serious consequences for the company. That move with the auditors, for example, could potentially result in Arcturus getting booted from the Nasdaq. In a statement, Arcturus had this to say:
“The Payne Group’s actions are calculated non-disclosures that promise to keep Arcturus shareholders in the dark at this critical time in the Company’s history, causing direct and ongoing harm to the Company and its shareholders as the EGM approaches. We believe that if Payne and his associates are allowed to continue to evade disclosure requirements and operate in violation of Regulation 13D, Arcturus will not be able to have a free and fair director election.”