July 12 (Bloomberg) -- Annaly Capital Management Inc. directors were sued by a shareholder over the real-estate investment trust’s plan to be managed by a separate firm that would employ its current executives.
Investor Jeffrey L. Doppelt filed the lawsuit in New York State Supreme Court in Manhattan yesterday, accusing the directors of breaching their fiduciary duties and seeking to rescind the move. Doppelt, a resident of Nassau County, said he has been a shareholder since 2008 and holds more than $50,000 worth of Annaly stock.
Investors in New York-based Annaly, the largest REIT that buys mortgage debt, approved the management shift in May. The move left Annaly, which ended 2012 with $133.5 billion of assets, with a management structure similar to rivals.
The plan transferred the company’s entire management capability to the separate firm “for no consideration,” according to the complaint. The directors made no effort to assess the value of that capability, which the company has paid millions of dollars for in the past, Doppelt said.
“The externalization permits the manager to engage in other investment management business by managing the assets of third parties for a fee,” Doppelt said in the complaint. “This business of earning investment management fees, a corporate opportunity belonging to Annaly, has been usurped by Annaly’s executives.”
Jay Diamond, a spokesman for Annaly, didn’t immediately return telephone and e-mail messages seeking comment on the suit.
The case is Doppelt v. Denahan, 652447/2013, New York State Supreme Court, New York County (Manhattan).