Titanium Metals Shareholder Sues Harold Simmons Over His "Rampant Abuse of Power"
Radioactive-waste-burying, Rick Perry-money-giving, Swift-Boating Harold Simmons begins his new year with a federal lawsuit brought by a shareholder in LBJ Freeway-HQ'd Titanium Metals Corporation, where Simmons serves as chairman of the board -- the same board also named as defendants in the suit dropped off Friday at the Earle Cabell. Alleges Bert Bauman, Simmons's tangled interests in a host of companies -- among them Titanium Metals; Contran Corporation; Kronos Worldwide, Inc.; Valhi, Inc.; CompX International Inc. and NL Industries, Inc. -- has allowed him to get away with years' worth of "self-dealing transactions that were beneficial to sister entities he controlled at the expense of the Company," meaning the publicly traded Titanium Metals, otherwise known as TIMET.
As always the whole filing follows, and for clarity's sake this one blessedly includes several diagrams showing how all of Simmons's companies are connected and how much interest he (and his family members) have in each. (Filing those away for later.) But long story short: Bauman alleges that Simmons, with the OK of a board that includes brother Glenn, used TIMET to help his other businesses by, among other things, making loans to "other H. Simmons-controlled entities at below-market interest rates and agreements"; and using TIMET to "purchase shares of one of his controlled entities for a far greater amount than the intrinsic value of the stock, artificially propping up the value of the stock (of a company which H. Simmons and his family own 94%)." The suit provides alleged details concerning those loans, which involved CompX and Contran, and TIMET's purchase of Valhi stock.
Bauman also alleges that Simmons got away with his "rampant abuse of power" by filing "materially misleading" proxy statements with the Securities and Exchange Commission:
Each of the Proxy Statements was materially inaccurate because they failed to disclose numerous highly material facts and circumstances. The materially inaccurate Proxy Statements caused direct harm to the Company in that, among other things, defendants' omissions perpetuated a systematic regime of self-dealing, causing TIMET to engage in a number of transactions with sister entities controlled by defendant H. Simmons on terms highly beneficial to the H. Simmons entities and highly detrimental to TIMET.
Bauman's being represented by Joe Kendall, the former U.S. district judge.
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