Focus Financial Partners, Inc.

Case Details

Class Period: June 9, 2023 - June 9, 2023
Date Filed: December 27, 2023
Case Number: 1:23-cv-01466
Jurisdiction: District of Delaware
icon-casetype Case Type: Securities Case

Case Summary

A class action complaint has been filed against Focus Financial Partners Inc. (“Focus Financial,” “Focus” or the “Company”) and certain of the Company’s officers and directors (collectively, “Defendants”) on behalf of a class (the “Class”) consisting of (1) all persons or entities that sold shares of Focus Financial common stock (NASDAQ: FOCS) from February 27, 2023 through the closing of the “take-private” acquisition of Focus Financial by Clayton, Dubilier & Rice, LLC (“CD&R”) on August 31, 2023 (the “Merger”), including investors who sold their shares of Focus Financial common stock into the Merger, and (2) all persons or entities that held Focus Financial common stock on the June 9, 2023 record date for the Merger who were entitled to vote on the Merger.

The case was filed in the United States District Court for the District of Delaware (the “Court”) and is captioned: AltShares Event-Driven ETF v. Focus Financial Partners, Inc., No. 1:23-cv-01466-MN (D. Del.) (the “Action”). The complaint asserts claims under Sections 10(b), 14(a) and 20(a) of the Securities Exchange Act of 1934, and U.S. Securities and Exchange Commission Rules 10b-5 and 14a-9 promulgated thereunder.

Focus Financial holds ownership interests in independent fiduciary wealth management firms providing investment and financial services to high and ultra-high net worth individuals and families. Prior to the Merger, private equity firm Stone Point Capital LLC (“Stone Point”) held approximately 20.6% of Focus Financial’s voting power and appointed two members to the Company’s board of directors (the “Board”).

The complaint alleges Defendants materially misrepresented the sale process leading up to the Merger by, among other things, omitting that they failed to adequately solicit potential strategic acquirors for Focus Financial. Contrary to Defendants’ public statements concerning the Merger, including in the definitive shareholder proxy statement filed on June 12, 2023, the sale process allegedly was not “thorough” because strategic buyers were not adequately canvassed by Defendants, the one strategic buyer that broke through was denied critical due diligence and its higher-priced merger proposal was rejected. As alleged in the complaint, Stone Point preferred a transaction with CD&R, as opposed to the strategic acquiror that was prepared to offer more to Focus shareholders, given Stone Point’s interest in obtaining a more lucrative equity rollover into a private equity firm.

Moreover, while Defendants portrayed a robust arm’s-length negotiating process overseen by a purportedly “independent and disinterested” special committee of the Focus Board (the “Special Committee”), the Special Committee members were allegedly not disinterested nor independent given the personal financial windfall they received under the Merger. The complaint further alleges that the Special Committee’s financial advisor on the Merger, Goldman Sachs & Co. LLC, suffered from numerous conflicts of interest that served to limit the pool of potential acquirors considered by the Special Committee. As alleged in the complaint, the belated proxy supplement issued a mere six business days before the shareholder vote on the Merger also did not cure Defendants’ misstatements.