RTW Investments, a $6.5bn hedge fund focused on investment in the life sciences sector, is under investigation by the Securities and Exchange Commission (SEC) for its role in a contentious proxy fight involving medical technology company Masimo Corp, according to a report by Bloomberg.
The report cites the New York-based hedge fund, which was founded by Rod Wong, as disclosing the inquiry in a client note on Monday. RTW emphasised that the investigation is at a fact-finding stage and does not imply any legal violations.
“We are fully cooperating with the SEC,” the firm stated.
The investigation comes after a heated proxy battle earlier this year between Masimo and activist hedge fund Politan Capital Management. In September, Politan secured two board seats, unseating Masimo founder and CEO Joe Kiani, who later resigned.
Following the election, Masimo filed a lawsuit in federal court in Manhattan, accusing Kiani and RTW of engaging in an “empty voting” scheme. The company alleges that this tactic was used to manipulate the proxy vote.
“Empty voting” refers to a strategy where an investor artificially inflates their voting power by purchasing shares and simultaneously entering short positions to offset the economic risk. The trades are typically reversed immediately after the shareholder vote.
Masimo claims the scheme made Kiani and RTW part of an undisclosed “insider group,” requiring them to report material changes in their holdings and to surrender any short-swing profits under insider trading laws.
RTW has previously described Masimo’s lawsuit as “improper on multiple levels.”
Representatives from RTW, Masimo, and the SEC declined to comment on the investigation or the allegations.
