Posted by Ashley Scales.
On February 22, 2018, Palantir was ordered to open their books to an investor who was seeking U.S. fraud probe. The judge ruled, “Data analytics and security company Palantir Technologies Inc. must open its books to early investor Marc Abramowitz.” Abramowitz wants to investigate possible fraud and misconduct at the esteemed private U.S. Company. He sued the firm after a 2015 falling out with the company’s chief executive officer, Alexander Karp. The lawsuit claims that Palantir prevented Abramowitz as well as many others from selling their stock in the privately owned company, while allowing sales by Karp and Chairman Peter Thiel.
Judge Joseph Slights of the Delaware Court of Chancery said that Abramowitz showed “a proper purpose of investigating potential wrongdoing and a credible basis to justify further investigation.”
Through the KT4 Partners LLC fund he manages, Abramowitz invested an initial $100,000 in Palantir in 2003. According to Judge Slights’ 50-page opinion, Abramowitz’s investment is now estimated to be worth about $60 million.
Abramowitz and Karp had a close relationship until their falling out in 2015. Karp “verbally abused” Abramowitz and accused him of taking intellectual property from the company. Soon after their falling out, Abramowitz tried to sell his stock in Palantir, but he claimed that the company blocked the deal by making an offer of newly issued stock to the potential buyer. According to Slights, Abramowitz began pursuing information from Palantir while he considered suing the company for blocking the sale of his stock. In September 2016, in response to the potential claim against the company, Palantir sued Abramowitz for supposedly stealing trade secrets. In a comment, Palanti said that they plan to continue to pursue their case against Abramowitz.
Abramowitz brought his case to Delaware in March 2017. Palantir claimed that Abramowitz “should be denied information because he was likely to use it to build his lawsuit over the blocked sale”. Judge Slights ruled, “Abramowitz could investigate Palantir’s lack of annual meetings, corporate amendments that limited KT4’s rights and the company’s sales of stock”. However, Abramowitz would not be allowed to investigation Palantir’s value or Karp’s compensation.
Ashley is an accounting major at the Stillman School of Business, Seton Hall University, Class of 2020.