Shareholders who sued Diana Containerships and Toronto hedge fund Murchinson over Kalani Investments’ backing of the US-listed shipowner have ended the case after eight years.
The decision by lead plaintiffs Burcin Ekser, Steven Gerber and Gianfilippo Mogavero came in response to an order by a US district judge, who threatened to throw out the lawsuit after the defeat of similar cases against other shipowners funded by Kalani.
The voluntary dismissal filed by the shareholders’ lawyers at Pomerantz in effect puts an end to the class action.
A legal expert with knowledge of such disputes said any other shareholders who might seek to carry the case forward would face a statute of limitations that would probably prevent them from filing anew.
As TradeWinds has reported, investors filed the lawsuit in 2017 alleging that Diana Containerships — led by Simeon Palios at the time and before the company became Performance Shipping — engaged in a manipulative series of transactions with Kalani that pushed down the value of the shares.
According to the lawsuit, Diana Containerships issued shares at a discount to Kalani, which then sold them in the market. When the share price fell below the levels required for a US listing, Diana Containerships carried out reverse stock splits.
But Diana Containerships and Murchinson had asserted from the start that the transactions had been disclosed to investors.
The case was one of three filed in 2017 in the US District Court for the Eastern District of New York over similar Kalani deals with US-listed Greek shipowners.
US district judge Brian Cogan presided over the trio of cases, dismissing a lawsuit against George Economou’s DryShips in October this year and another against Evangelos Pistiolis-led Top Ships in 2019.
Earlier this month, he issued an order asking why he should not dismiss the Diana Containerships case in light of the DryShips decision.
The shareholders’ lawyers filed the voluntary dismissal rather than answer that question.
Kalani, Murchinson and its CEO Marc Bistricer were represented by Schulte Roth & Zabel, while Diana Containerships had Fried, Frank, Harris, Shriver & Jacobson on its side.
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