A pension fund in Detroit has withdrawn a lawsuit filed only two weeks ago that accused Rocket Companies Chairman Dan Gilbert of insider trading.
On Wednesday, the Police and Fire Retirement System of the City of Detroit said that the lawsuit was filed due to a “miscommunication” with a third-party law firm.
“The firm was authorized to review the case and do fact-finding but not authorized to file a lawsuit,” the pension fund said in a statement. “The PFRS General Counsel has taken steps to ensure that PFRS be removed as a party to this lawsuit immediately.”
The lawsuit, filed in Delaware Chancery Court on Nov. 23, said that the pension fund bought $500 million of Rocket Companies’ stock from Gilbert on March 29 at $24.75 per share, according to Cleveland.com. The purchase was made just four days after the billionaire announced a $500 million philanthropic investment in Detroit neighborhoods.
The lawsuit says that Gilbert knew the company stock would be less valuable at the time of the sale to the pension fund, and that he avoided major financial losses – $160 million – doing so, Cleveland.com reported. Rock Holdings, which is controlled by Gilbert, was also named in the now-defunct suit.
Aaron Emerson, a spokesperson for Rock Holdings, said that the assertions in the complaint are “baseless and defy logic.”
“We have either met or exceeded guidance ranges that were provided in our 2021 earnings releases while earning more than $10 billion in net revenue this year,” Emerson said in a statement.
The Police and Fire Retirement System of the City of Detroit said it engages, from time to time, in derivative and securities lawsuits to protect its $3 billion portfolio.
“These lawsuits are typically filed by third party law firms – not PFRS general counsel – and are often done under limited time frames for court filings. It appears a full measure of the facts were not known at the time of the filing by an outside law firm,” said the pension fund regarding the case.