Activist investor firm Ancora Holdings Group and Chairman and CEO Fred DiSanto on April 7 filed a lawsuit against U.S. Steel Corp. in Ohio’s Cuyahoga County Court of Common Pleas for making defamatory statements about Ancora’s shareholder activism.
In a letter sent to U.S. Steel shareholders on March 24, U.S. Steel’s leadership falsely accused DiSanto and Ancora of running a previous proxy contest for personal gain and claimed that DiSanto had been accused by the U.S. Securities and Exchange Commission (SEC) of violating a non-existent “Anti-Greenmail Statute.”
Ancora had previously been accused of “greenmail” during a proxy battle with retailer Big Lots. The Corpus Christi Firefighters’ Retirement System accused Ancora of attempting to manipulate Big Lots’ stock price, but the Ohio Courts ruled in Ancora’s favor, dismissing the claims in March 2024.
“Mr. DiSanto and Ancora have never run a proxy contest for their personal benefit and Mr. DiSanto and Ancora have never been accused by the SEC of violating the Anti-Greenmail Statute or extracting millions of dollars of profit for himself. Indeed, there is no federal “anti-greenmail” statute,” the lawsuit said.
Cleveland, Ohio-based Ancora had launched a proxy battle with U.S. Steel earlier this year over concerns about the company’s leadership and direction. However, on April 9, Ancora announced it was withdrawing its nomination of director candidates for U.S. Steel’s annual meeting on May 6 due to President Donald Trump announcing a new national security review of the Nippon Steel transaction – a signal the deal could be revived.
Ancora argues in its lawsuit against U.S. Steel that it was falsely accused of financial misconduct. “Defendants fabricated their charges against Mr. DiSanto and Ancora to discredit Ancora and its leadership and defeat its proxy campaign. The claims were categorically and demonstrably false,” the lawsuit stated.
U.S. Steel issued a press release on March 27, admitting that the statements were false and apologizing for the error. However, Ancora’s lawsuit states that the retraction was made in a late-night press release and was not mailed to U.S. Steel shareholders as the initial letter was. Furthermore, the defamatory open letter remains publicly available on U.S. Steel’s website, Ancora said.
“As shareholders in U.S. Steel and stewards of its future, Mr. DiSanto and Ancora bring this action to set the record straight regarding the Defendants’ scheme to discredit them with lies,” the lawsuit said.
In its proxy fight with U.S. Steel, Ancora had criticized CEO David Burritt for mismanagement, citing “excessive capital spending, high debt, soft earnings and nonexistent contingency plan,” and proposed industry veteran Alan Kestenbaum as a replacement.
Despite the new national security review, Trump reiterated on April 10 that he does not support the U.S. Steel-Nippon deal, maintaining his campaign position that the iconic American company should remain under U.S. ownership.