Marcato Seeks To Unseal Sothebys Court Documents

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Marcato Capital is attempting to turn up the heat on Sothebys even further. The firm has filed a document requesting the release of some un-redacted court documents in a lawsuit between Dan Loeb’s Third Point and former Sothebys CEO William Ruprecht and the firm’s board members.

Marcato Capital requests court documents on Sothebys

Marcato has a 9.53% stake in Sothebys. The firm slammed Sothebys management last week, demanding for a $500 million share repurchase and the ouster of Chief Financial Officer Patrick McClymont. Now Marcato management have disclosed their next tactic in the fight to get their demands met.

In a filing with the Securities and Exchange Commission today, the activist fund revealed that it had filed a Notice of Challenge to Confidential Treatment with the Delaware Chancery Court. Marcato wants the court to release some documents from the case Third Point LLC v. Ruprecht.

Sothebys now has five days to decide whether it will oppose the firm’s request and try to keep the un-redacted court documents confidential.

Confidential documents

That case was filed by Dan Loeb’s firm against the Sothebys CEO as the activist investor made his own demands, including some seats on the auction firm’s board of directors. The two sides settled and announced that settlement on May 5, 2014.

As part of the settlement, Loeb won three seats on Sothebys’ board, although further details of the settlement were not revealed and some of the court documents still have not been released. Marcato Capital wants to see those documents and have them made public.

Specifically, the firm is requesting access to Third Point’s and Sothebys’ opening briefs, the defendants’ answering brief and Third Point’s reply brief. According to the filing, Marcato does not believe the information in the documents should be given confidential treatment because of the context.

It also suggests that enough time has passed and points out that Ruprecht, who is believed to be the focus of “much of the redacted language” in the court documents, has stepped down from his position as CEO.

What might Marcato do with the documents?

Given Marcato’s criticism of Sothebys’ management and demands for increased capital return, it probably is seeking more ammunition in its fight. It’s still early in in the firm’s activist campaign against the auction house, and Marcato makes the second activist (after Loeb) to be targeting it.

As Dan Loeb holds three board seats at Sothebys, he will have quite a bit of influence over what happens next and possibly the selection of the next CEO. It will be interesting to see how this new chapter plays out and whether Marcato ends up being at odds with Loeb.

As of this writing, shares of Sothebys were up by 0.39% to $44.12 per share.

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