Published on: December 4, 2025, at 04:51h.
Updated on: December 4, 2025, at 04:51h.
- Hedge fund challenges conclusions of Penn’s special legal committee
- This committee determined that Penn’s reduction of board size complied with regulations
- Vora alleges it was not consulted during the committee’s formation
HG Vora, a hedge fund currently engaged in a protracted legal dispute with Penn Entertainment (NASDAQ: PENN), criticized the conclusions drawn by a special legal committee (SLC) appointed by the board of the casino operator, claiming they are biased and factually incorrect.
The two-member SLC concluded that Penn’s 2024 choice to lower its board from nine to eight members, permitting only two directors to stand for election rather than three, was justified. In response, Vora initiated legal action against the regional casino, claiming this decision contravened Pennsylvania corporate law and shareholder rights.
“The SLC’s investigation was biased, misapplied the legal standards necessary to evaluate the Board’s decision, failed to provide factual support for its primary conclusion, and contained incorrect factual claims,” stated Vora in a legal filing with the US District Court for the Eastern District of Pennsylvania.
The hedge fund, which sought to appoint three directors to Penn’s board, argues that the committee did not conduct a “reasonable investigation and lacked a valid foundation for its recommendation against pursuing Plaintiffs’ breach of fiduciary duty claim.”
Vora Claims Penn Prevented Clifford from Joining the Board
After a proxy fight, Vora succeeded in electing Johnny Hartnett and Carlos Ruisanchez to Penn’s board, but also aimed for William Clifford to be part of that team. Following the company’s annual meeting in June, Vora noted that Clifford’s nomination “received backing from numerous institutional investors and actively managed funds and earned a majority of the votes cast in the election.”
However, a seat was unavailable for him because Penn limited the number of positions open for election this year from three to two. While Penn has not explicitly stated that Vora’s push for Clifford influenced this decision, the gaming company has clearly expressed its intent to keep Clifford off the board, citing his “outdated views,” among other reasons.
A recent regulatory document claims the SLC operated independently, but Vora’s legal team disputes that assertion, arguing that the committee represented the interests of the Penn board.
“The SLC and its attorneys clearly aimed to serve their client, the Board, to achieve its goal of excluding William Clifford from the position at all costs, disregarding the clear indication from PENN’s shareholders that they want him as a board member,” as stated in a letter from law firm Quinn Emanuel to Penn’s legal counsel.
SLC Exhibited ‘Procedural Deficiencies’
While Penn maintains that the SLC was unbiased, Vora’s legal representatives offer a different perspective, asserting that the committee’s report presented “procedural deficiencies” arising from a “capture mentality.” This implies that the hedge fund’s attorneys see the report as self-serving, and criticize the committee for failing to interview Hartnett and Ruisanchez — the two directors nominated by Vora who were allowed to stand for election.
“However, the SLC completely omitted interviewing either of them, excluding both from the process,” the Quinn Emanuel letter states. “The only reasonable inference from this glaring oversight is that the SLC was unwilling to hear their perspectives for fear that their potential support for Mr. Clifford could weaken their desired conclusions.”
The firm further asserts that had the SLC been genuinely independent, Hartnett and Ruisanchez would have rightfully been included in the committee given their qualifications for such roles.