Peter Thiel’s Palantir Faces an Escalating Court Battle With an Early InvestorBy
Company thwarted stock sales, guarded results, suit says
Palantir accused investor last year of stealing trade secrets
The battle between Palantir Technologies Inc. and a longtime investor just got nastier. KT4 Partners LLC, which first backed Palantir more than a decade ago, sued the privately held data analytics company, saying attempts to sell shares were thwarted and that financial information was withheld.
The suit filed by KT4 Partners in Delaware asks to inspect Palantir’s books and records. It comes six months after Palantir sued KT4 Partners, its managing member Marc Abramowitz and a charitable trust operating in his name. Palantir claimed Abramowitz stole trade secrets and falsely filed five patents in his name for work completed by the company.
“This lawsuit is nothing more than a blatant attempt to distract from Mr. Abramowitz’s unlawful and egregious theft of our intellectual property,” Palantir wrote in an emailed statement. “His allegations are without merit, and needless to say, Palantir will continue to aggressively pursue its existing legal action against him.”
Founded in 2004 by tech businessmen including billionaire Peter Thiel, Palantir is among Silicon Valley’s most highly valued and secretive companies. In addition to KT4 Partners, an early investor was the venture capital arm of the U.S. Central Intelligence Agency. Palantir’s customers include government spy agencies around the world. It was most recently valued at $20 billion by investors, and it’s well-positioned to cash in on more government work thanks to Thiel’s relationship with President Donald Trump.
The legal fight highlights the contentious relationships between startup investors and companies that want to maintain tight control of stockholders. Investors rarely get company updates even from mature ones worth billions.
Mary Jo White, the former chair of the Securities and Exchange Commission, flagged these risks during a presentation last year at Stanford University. Although problems of unequal disclosures have been detailed in lawsuits by early investors, the SEC hasn’t issued guidelines to reform the growing private market.
A heavily redacted version of KT4 Partners’ lawsuit was filed last week. The firm’s stake in Palantir was recently valued at more than $60 million, according to the suit.
The Delaware case is KT4 Partners LLC v. Palantir Technologies Inc., 2017-0177, Delaware Court of Chancery. The California case is Palantir Technologies Inc. V. Abramowitz, 16CV299476, California Superior Court, Santa Clara County (San Jose).
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