eSpeed investor Chapman Capital continues to seek changes in board, sale of company

By Lisa Kerner

Charlotte, N.C., April 18 - eSpeed, Inc. investor Chapman Capital LLC demanded that the company's non-affiliated owners be allowed to replace board members Albert M. Weis, John H. Dalton, Barry R. Sloane and Barry M. Gosin.

The shareholder, with a 9.3% stake in the New York trading technology company, also demanded that eSpeed's board "immediately retain an independent auditor to review the joint services agreement, compel the conversion of all class B common shares into class A common stock, and engage an investment bank to maximize shareholder value via an auction of the company," according to a company news release.

"Chief executive Howard Lutnick's three-kingdom reign over Cantor Fitzgerald, eSpeed and BGC Partners appears so infested with potential conflicts of interest and incestuous inter-company transactions that a completely new set of corporate governors may be required to exterminate any vermin from eSpeed's board room," Chapman Capital managing member Robert L. Chapman, Jr. said in the release.

"The non-return of 24 straight business days of telephone calls from eSpeed's largest class A owner is something one might have expected from multi-kingdom conflicted tyrants such as Hollinger International's Conrad Black, but not someone as conscious of his public reputation as Mr. Lutnick."

Chapman said the company's rejection of Tullett Prebon plc's premium acquisition proposal has heightened concerns that "Napoleonic behavior continues to be condoned by eSpeed's director fiduciaries."

The investor recommended that eSpeed follow the path of other Delaware-incorporated public companies Conoco Inc., Agere Systems Inc. and Pacific Health Systems, Inc. by "collapsing the dual voting ownership structure."

On March 21, Chapman Capital asked eSpeed to retain an auditor to review the joint services agreement, distinct from eSpeed/BGC Partners/Cantor Fitzgerald's shared financial auditor Deloitte & Touche LLP.

Chapman, in a previous release, cited a recent ruling in the U.S. Court of Appeals for the Federal Circuit in Washington that a jury-invalidated patent was unenforceable due to Cantor Fitzgerald's inequitable conduct in the prosecution of the patent. The ruling found that Cantor Fitzgerald's material included misleading statements.

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