Commercial PropertyWhat Does RWSSC Want To Know?
After reviewing the PriceWaterhouseCoopers Report of Investigation, Multiple Listing Service of Illinois, (MLSNI) shareholder association executives took a few days to decide what to do. While some leaders wanted to forget the whole thing, others want the audit to continue and for the MLSNI board of directors to take more action regarding the audit"s findings with regard to "MLSNI"s officers, directors and professional advisors" and whether they "discharged their fiduciary duties to MLSNI and its shareholders" with regard to the corporation"s investment in a data licensing company called REBIG, operated by MLSNI CEO Jay Huffman"s wife, Brenda Huffman.
When they didn"t, one association hired an attorney.
Philip C. Stahl, Grippo & Elden LLC, represents the Realtor Association of West / South Suburban Chicagoland (RWSSC), a shareholder in MLSNI. The Chicago-based law firm specializes in "high-stakes commercial litigation for major U.S. companies."
Stahl has written a Shareholder Request for Information to Jay Huffman, CEO of MLSNI, on behalf of RWSSC this week.
In his letter to MLSNI Mr. Huffman, Stahl writes, "The PWC Report raises many questions implicating officers" and directors" and professionals" discharge of their duties of loyalty and care, but which remain unresolved."
For example, Stahl asks the following questions:
Where are the minutes of the meetings of the Board of Directors and Executive Committee or other evidence documenting that officers" and directors" duties were recognized and discharged? The absence of any such documentation alone suggests that either the officers and directors or the professionals breached the duty of care (and perhaps the duty of loyalty.)
Was Jay Huffman acting in MLSNI"s best interests - pursuant to his duty of loyalty - when he negotiated his wife"s consulting agreement, including MLSNI"s insistence that Ms. Huffman be CEO of REBIG? How did MLSNI benefit from: (a) not exclusively owning any intellectual property Ms. Huffman developed a consultant for MLSNI (which she then licensed as a capital contribution to REBIG), and (b) entering into REBIG"s operating agreement which granted Ms. Huffman significantly better terms than MLSNI?
If Jay Huffman recused himself from certain decisions involving his wife, who protected MLSNI"s interests?
In matters related to Ms. Huffman and REBIG, what oversight and supervision did MLSNI"s directors provide? Did they allow Jay Huffman too much latitude with such a large financial commitment and fail to manage the business and affairs of MLSNI? Did the directors fully inform themselves of all the facts surrounding REBIG and Ms. Huffman"s involvement in it? On what basis did they decide to enter into the REBIG operating agreement which provided significantly better terms for Ms. Huffman"s membership interest than those applicable to MLSNI? Did the directors consider whether these transactions were fair to MLSNI and its shareholders?
Did the directors have sufficient information to make these decisions? Did the directors understand the significance of the information and their decisions?
Did MLSNI management and counsel give the Board proper advice about the directors" duties, and adequate explanation of available information, to enable directors to perform their obligations to manage the operation? Did counsel give Mr. Huffman proper advice about his duties?
"Neither the PWC Report, minutes of Board and Executive Committee Meetings, nor Mr. Huffman"s responses to questions at the August 25 Board meeting, show whether Mr. Huffman fully explained to the directors the terms and consequences of these transactions, and whether the directors fully considered the ramifications of these transactions," writes Stahl. "There is no evidence that MLSNI"s counsel explained these duties to the directors or advised them as to proper procedures to ensure their decisions were within the business judgment rule and properly documented."
Jim Kinney, the Chicago Association of Realtors appointed director, says, "We support the right of any shareholder to examine the books and records of MLSNI, as they always have had that right. I am confident that the board has conducted itself in a manner that should not support any actions against it."
In a previous email exchange, Kinney informed Realty Times, "Multiple Solutions and REBIG were both voted and discussed by the board of Directors and both entities followed our strategic plan. All monies invested in both projects were discussed and voted upon by the full board. Indeed at almost all board of directors meetings the shareholders representatives and the association executives are in attendance in the audience. These actions and discussions all occurred in their presence."
In separate news, Kinney confirms that the Executive Committee of MLSNI "was notified that REBIG was closing its doors."