A total of 11
defendants were named, with allegations including: breach of fiduciary duty, breach of loyalty duty,
theft of business opportunity and fraud.

Exchange-traded funds provider XShares has filed suit in New
York state court against its founders, Jeffrey Feldman and Anthony Dudzinski,
“alleging actions that enriched the officers to the detriment of the company,”
according to a report by journalist Lawrence Carrel.

The report, which is dated Nov.
3, appears on the companion blog to the book written by Carrel and published by
John Wiley & Sons, “ETFs for the Long Run.” (The full article can be found here.)

No date was listed in the
article for the suit, filed with the Supreme Court of New York. A total of 11
defendants were named, with allegations including: breach of fiduciary duty, breach of loyalty duty,
theft of business opportunity, corporate mismanagement, misappropriation of
corporate assets, self-dealing and fraud.

According to Carrel’s report, several specific allegations are made. One is
that former CEO William Henson and current interim CEO Joseph
Schocken received bonuses and other compensation that represented a conflict of
interest with Xshares. Another is that the defendants diverted a corporate
opportunity by allowing investor Grail Partners to misappropriate Xshares’
business model.

It also detailed charges that the company failed to meet capital and
regulatory requirements by not maintaining separate books and records for
XShares and its subsidiaries.

Representatives of Xshares declined to
comment to Carrel, a veteran financial reporter whose work has appeared on
IU.com in the past. A spokeswoman for the company declined comment to IU.com on Tuesday morning.

Besides making allegations against
management and specific individuals, the lawsuit also charges that Xshares “failed
to provide adequate or not misleading disclosures to investors.”

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