Quantcast
The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:Suit Hints  at Rydex Price Tag Not Rated 3.6 Email Routing List Email & Route  Print Print
Wednesday, August 8, 2007

Suit Hints at Rydex Price Tag

Reported by Sean Hanna, Editor in Chief

How much is Security Benefit Life paying for Rydex? Barring regulatory requirements, the value of a deal is typically a closely guarded secret by all involved. In the case of Rydex's sale, though, a lawsuit is bringing more details of the June 28 sale to light -- court records show that Security Benefit is spending as much as $775 million to buy Rydex (the sale is expected to close this fall). The suit also gives a glimpse into the firm's strategy to retain its senior staff through the sales process.

Prior to the June sale, published reports suggested that E-Trade had bid as much as $1 billion for Rydex, suggesting that the Viragh family did not take the highest monetary bid on the table.

The can be found in a lawsuit filed last week by Phil Fragasso, a senior vice president and chief marketing officer for Rockville, Maryland-based Rydex [download original and amended complaint PDFs]. Fragasso is claiming in the suit that Rydex CEO Carl Verboncouer made verbal promises that Rydex "would do the right thing" and give Fragasso accelerated phantom share grants if he signed a "more restrictive non-compete agreement." Fragasso also claims that some of the Rydex units he was promised had not been delivered by a June, when he claims they were due.

A spokesperson for Rydex said the firm could not comment on pending litigation. Wayne Dennison, Fragasso's counsel at Brown Rudnick Berlack Israels, is on vacation and could not be reached for comment.

According to Fragasso's complaint, Rydex provided special Executive Participation Units similar to phantom shares to roughly 25 of its senior executives as part of its Value Participation Plan. As part of the plan, the managers agreed to a non-compete agreement. Fragasso also claims in the complaint that he was given additional units in recognition for his serving as one of seven members of Rydex' Executive Office.

Fragasso, who earlier in his career was a senior marketer at Liberty Funds (now part of Bank of America's Columbia Funds), joined Rydex in July of 2004.

An initial version of the complaint filed on August 1, said that "Security Benefit agreed to purchase Rydex for approximately $775 million" and that "$110 million is allocated by Rydex for payments to its senior executives." The initial complaint also claims that Fragasso's units were worth approximately $1.3 million because of the sale. Those references to the value of the sale were dropped in an amended filing with the court filed on August 3.

However, other sources who claim to be familiar with the terms of the sale have told The MFWire that the sales price came to between $770 million and $800 million. One of those sources also says that 26 Rydex executives, including CEO Verboncouer, will receive grants under the incentive plan ranging from $1.35 million for 10 of the executives to $25 million for Verboncouer himself.

The Viragh family, whose trust inherited the company when founder Skip Viragh died, is also providing a gift to employees who remain with the firm through the sales process, according to a source at the company. Those gifts are based on the employee's pay and length of service and average about $40,000 per person, according to the source.

Not all of the proceeds of the sale will go to the Viraghs. Goldman Sachs, the trust's bankers on the sale, will collect a fee of roughly seven percent of the sale price. That amount is in line with typical investment banking fees. 

Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE

3.6
 Do You Recommend This Story?



GO TO: MFWire
Return to Top
 News Archives
2025: Q3Q2Q1
2024: Q4Q3Q2Q1
2023: Q4Q3Q2Q1
2022: Q4Q3Q2Q1
2021: Q4Q3Q2Q1
2020: Q4Q3Q2Q1
2019: Q4Q3Q2Q1
2018: Q4Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Raw XML
Add to My Yahoo!
follow us in feedly


    Sorry, no records in the database matched your search parameters. Clich back and try again.



  1. Nicsa webinar - New research by Alex Edmans and the Diversity Project - The Power of diverse thinking: How the best teams make decisions, July 1
  2. MFDF Director Discussion Series - Open Forum, July 9
  3. MFDF webinar - Mid-Year Tax Update for Registered Investment Companies, July 10
  4. MFDF Director Discussion Series - Open Forum (Philadelphia), July 15
  5. 2025 MMI Women in Advisory Solutions Forum, Jul 15-16
  6. Nicsa webinar - How Trusted GenAI is Transforming Data Access in Asset Management, July 16
  7. MFDF webinar - M&A and Consolidation in Asset Management, July 16
  8. MFDF webinar - ETF Conversions, July 17
  9. MFDF Director Discussion Series - Open Forum (New York), July 22
  10. MFDF Ask Anything webinar - AI Edition, July 24
  11. MFDF webinar - Use of Derivatives by RICs, July 29
  12. MFDF Director Discussion Series - Open Forum (Columbus, Ohio), August 20
  13. Samfund Soiree Boston 2025, August 21
  14. MFDF webinar - The Audit Committee Chair's Guide to Balancing Duties and Emerging Issues, September 3
  15. ICI ETF Conference, Sep 8-10
  16. Nicsa webinar - Reimagining Reconciliation: AI, Regulation, and Capital Markets Transformation, September 10
  17. MFDF webinar - Series Trust Funds - Compliance and Board Reporting, September 10
  18. MFDF In Focus - Board Oversight of DEI in Current Landscape, September 11
  19. MFDF webinar - MFDF 15(c) White Paper Webinar Series: Part 4 – Enforcement Action Takeaways, September 16
  20. MFDF webinar - Latest in Closed-End Funds Litigations, September 23
  21. MFDF webinar - Fixed Income Insights: Navigating Market Trends & Opportunities, September 24
  22. MFDF webinar - Risk Management Essentials for RICs and Boards, September 29
  23. MFDF webinar - Diligent - Tools for Fund Board Book, October 1
  24. 10th annual Fuse Forum, October 8
  25. MFDF webinar - Essential Strategies in Board Oversight of Operational Risk Management, October 14
  26. 2025 MMI Annual Conference, Oct 15-17




©All rights reserved to InvestmentWires, Inc. 1997-2025
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use