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Risk retention group to cover T. Rowe Price on Dell error

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Risk retention group to cover T. Rowe Price on Dell error

A mutual fund industry risk retention group is providing $100 million in coverage to T. Rowe Price Inc. in connection with an error involving Dell Inc.’s 2013 leveraged buyout, say market sources.

Baltimore-based Price said in a Jan. 4 U.S. Securities and Exchange Commission filing, which was publicized last week, that it had reached an agreement with its insurers to recover $100 million in coverage 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. It said also remaining claims could result in an additional recovery of up to $50 million.

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.

The $100 million was provided by Washington-based ICI Mutual Insurance Co., a risk retention group, according to market sources.

A T. Rowe Price spokesman had no comment, while an ICI Mutual spokesman could not be reached.

According to its website, ICI Mutual, which was founded in 1987 and is domiciled in Vermont, had $249.1 million in equity as of Dec. 31, 2015. It provides directors and officers and errors and omissions liability policies, investment company blanket bonds, and independent directors safety net liability insurance, according to the website.

 

 

 

 

 

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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.