Jeffrey Feldman and the rest of the XShares executive suite caught a break.
The Supreme Court of New York dismissed the lawsuit XShares Group, the ETF firm he founded, filed against Feldman, his former partner Anthony Dudzinski, its former and current chief executive officers, and seven other company managers or officers.
In a story first reported on this blog, Donald Aven, a former executive vice president of national sales for the XShares Group, the parent company of XShares Advisors, the ETF sponsor; and his brother, Samuel Aven, an investor in the company; filed the suit in August. They alleged that the 11 defendants committed breach of fiduciary duty, breach of loyalty duty, theft of business opportunity, fraud, and other actions that enriched the officers to the detriment of the company.
According to a written statement XShares released Tuesday, Supreme Court Justice Charles E. Ramos stated on Nov. 25 that no proper amended complaint had been put before the court. Judge Ramos also found that the caption was incorrect in naming XShares Group, as the plaintiff instead of the Avens’ as plaintiffs individually and on behalf of the company, said XShares. As a result, the court ordered that the caption be changed accordingly and that the action be dismissed outright,
“We are pleased with the Court’s decision,” said Feldman, founder and chief strategist at XShares, in a written statement.
And why wouldn’t he be. It’s the first good news the firm has had all year.
One should note, the lawsuit wasn’t dismissed for lack of cause, but rather on a technicality. Still, it’s an early Christmas present for a firm that hasn’t had much to cheer about this year.
Just a few weeks ago, the firm closed the four remaining HealthShares ETFs that had been the firm’s flagship product. Launched in January 2007 with 19 ETFs tracking narrow niches of the health care industry, HealthShares was XShares first family of ETFs. Earlier this summer, XShares also closed down its family of ETFs that tracked the real estate market.
XShares continues to manage the TDAX lifecycle ETFs for TD Ameritrade. These funds are currently outperforming the S&P 500 according to a TD Ameritrade spokesperson.