The tone of the tussle between Datatrak and one of its major shareholders has gone from bad to worse. Datatrak sparked the deterioration by accusing Arosa Investment Management of running a "back channel smear campaign," after which the shareholder retorted that the eClinical minnow is using "shameless and amateurish scare tactics" in an attempt to win the proxy fight.
Cleveland, OH-based Datatrak made its comments in a statement to confirm the postponement of its annual shareholder meeting. The meeting, which was due to be held on November 11, would have been a key event in the fight for the future of Datatrak. Arosa started the scrap last month by putting forward three candidates for election to the 5-person Datatrak board of directors. The Chicago, IL-based hedge fund started the proxy fight in response to what it sees as "dismal stock performance," "excessive executive compensation" and "poor corporate governance" at Datatrak.
Arosa owns a 9.9% stake in Datatrak, giving it significant leverage in the fight. But Datatrak is claiming the ways in which the hedge fund is throwing its weight around have veered into unethical territory. The eClinical player has accused Arosa and Alex Tabatabai, a managing partner at the hedge fund who is up for election to the board, of being involved with the anonymous sending of "certain personal records directly to shareholders, ... even going so far as fraudulently using the [Datatrak's] return address."
Datatrak has also accused Arosa of communicating with its customers and employees in an attempt to "negatively impact" its day-to-day business activities and "damage key business relationships." The trial tech firm is presenting the litany of accusations in a legal case against Arosa. And with its management perceiving the "reckless and unethical behavior" as having "tarnished the integrity of the election," they have postponed the annual meeting. Datatrak is presenting the postponement as a chance to give shareholders time to digest its response.
Arosa isn't buying the narrative presented by Datatrak. As the hedge fund sees it, Datatrak learnt that Arosa's candidates looked set to perform well in the election and delayed the annual meeting in an attempt to avoid losing the proxy fight. Datatrak has promised to hold the rescheduled annual meeting by the end of the year.
- read Datatrak's release
- and Arosa's response