Chapman takes aim at eSpeed, again

By Lisa Kerner

Charlotte, N.C., May 3 - eSpeed, Inc. investor Robert L. Chapman, Jr. once again contacted the company's chairman and chief executive officer Howard W. Lutnick, this time to take issue with remarks made during the company's first-quarter earnings call.

In his letter to Lutnick, Chapman said "It was with continued awe and amazement that I listened to your command performance over [Thursday's] conference call spinning eSpeed's 1Q2007 results. I viewed the hour as an opportunity to be entertained by you, particularly as you unknowingly dedicated 50% of the caller period to someone overseeing a large short position in eSpeed class A shares, Mr. Justin Hughes of San Francisco's linguistically (and apparently geographically) confused Philadelphia Financial."

Chapman also denied telling Hughes that "both Nasdaq and GFI were preparing to make bids for 'your' company imminently." According to Chapman, he advised Hughes that both GFI Group Inc. and Nasdaq Stock Market Inc., like eSpeed bidder Tullett Prebon plc, had expressed explicitly their desires to find an economic means of acquiring eSpeed.

In reaction to a description of Chapman Capital's actions as not being those "of a serious long-term holder" of eSpeed, Chapman said that "by definition, the 'longest-term' holder of eSpeed is one who paid $22.00 per share in eSpeed's December 1999 IPO. This lucky, longest-term holder's allegiance to 'Emperor Howard' has driven him to hold his eSpeed shares for the longest term possible - never selling."

Chapman went on to say in his letter, "This kind chap finds himself still sipping his Howard-flavored Kool-Aid that induces hallucinations of a future day 'when and if BGC's business goes electronic,' allowing eSpeed to 'receive 65% of the revenues over time for new products.'

"Sadly, it would appear that 'the actions of a long-term holder' are to lose nearly 60% of his investment in 'your company.'"

Chapman's letter to Lutnick was included in a schedule 13D filing with the Securities and Exchange Commission.

Chap-Cap Activist Partners Master Fund, Ltd. beneficially owns 1,839,293 shares, or 6.2%, of the New York trading technology company's stock.

Chapman has been critical of eSpeed over the past few weeks. He has sought to replace board members, to have the joint service agreement reviewed and to convert all class B common shares into class A common stock.

On April 18, the investor said, "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 is also frustrated by Lutnick's refusal to return his phone calls for more than 20 straight days, according to the SEC filing. In addition, Chapman said the company's rejection of Tullett Prebon's premium acquisition proposal has heightened concerns that "Napoleonic behavior continues to be condoned by eSpeed's director fiduciaries."

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.