Cooperman’s Omega Sues Tetragon Over 2012 Polygon Deal

Leon Cooperman’s Omega Partners sued the officers and directors of Tetragon Financial Group Ltd., claiming they used the 2012 purchase of hedge-fund firm Polygon Management LP to funnel company assets to themselves.

Omega Partners, which said it’s the biggest outside investor in Guernsey, Channel Islands-based Tetragon, brought the suit today in Manhattan federal court. Omega filed a shareholder derivative complaint in which it sued company officials on behalf of Tetragon itself.

Omega, based in New York, claimed that Tetragon’s co-founders, Patrick Dear and Reade Griffith, made tens of millions of dollars from the sale of Polygon, which they owned, for 11.7 million nonvoting Tetragon shares. The defendants then used $150 million of Tetragon’s cash to buy back nonvoting Tetragon shares.

“The structure and timing of these transactions underscores the fact that they were designed by defendants to benefit the principals to the detriment of TFG and its shareholders,” Omega said in the complaint.

Dear and Griffith co-founded Polygon in 2002 and Tetragon in 2005, according to Tetragon’s website. Tetragon invests in assets including collateralized loan obligations.

‘Specious Claims’

Omega is seeking unspecified damages on behalf of Tetragon and an order directing Tetragon’s board to reform its corporate governance practices and alter the Polygon transaction to prevent the alleged illegal diversion of its assets.

“It is unfortunate that Leon Cooperman has come up with these specious claims with no basis in fact or law nearly eight months after the announcement of the Polygon acquisition and notwithstanding the 27% increase in TFG’s share price since its announcement (with dividends reinvested),” Carissa Ramirez, a spokeswoman for Tetragon with Sard Verbinnen & Co., said in an e-mail statement.

The case is Omega Overseas Partners Ltd. v. Griffith, 13-cv-4202, U.S. District Court, Southern District of New York (Manhattan).

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