Investment firm reaps insurance payout on Dell voting error
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Investment firm T. Rowe Price Inc. says in a security filing that it has recovered $100 million in insurance, and could receive up to another $50 million, in connection with an error that caused it to mistakenly vote in favor rather than against Dell Inc.’s 2013 leveraged buyout, which proved costly to its clients.
Baltimore-based Price said in June 2016 that it would pay about $194 million to compensate certain clients for the proxy voting error the firm made in connection with the buyout of the Round Rock, Texas-based computer firm, which was held at the time in a number of its portfolios.
It said that at the time of the 2013 buyout, T. Rowe Price’s investment team had held a strong view that the merger consideration of $13.75 per share offered by Dell significantly undervalued the company, but because of the voting error its clients’ shares were submitted as voting for rather than against the deal.
On May 11, 2016, a Delaware court ruled that this voting error rendered its clients shares ineligible to pursue fair value in the deal. Based on a subsequent court ruling in the case, Price said it was making payments to clients resulting in the $194 million compensation.
In a Jan. 4 U.S. Securities and Exchange Commission filing, which was just publicized, the company said it had reached an agreement with its insurers to recover the $100 million in coverage, and remaining claims could result in an additional recovery of up to $50 million.
It said it had recorded a one-time operating charge of $166.2 million in its second quarter 2016 in connection with the issue.
T. Rowe Price had no comment on the insurers.
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