Data analytics company Mu Sigma and its founder, Dhiraj Rajaram, have been accused in a lawsuit of “grossly misleading” its investors, in order to buy back their shares at a lower price, reported Bloomberg.
In the allegations filed by Aon Corp. founder, Patrick G. Ryan claims to be duped of huge sums of money when Mu Sigma Inc. downplayed its growth prospects in a bid to buy back Ryan’s investment company’s (Walworth Investments LLC), early stake in Mu Sigma.
In the lawsuit, Mu Sigma and its founder are accused of “grossly misleading” the investors six years ago, to redeem 17.5% ownership of the data-analytics outsourcing startup.
The allegations are that founder, Dhiraj Rajaram, deliberately portrayed dim prospects of growth and performance, at a time when Mu Sigma was actually thriving. This was alleged to be done “to buy-out a significant shareholder at an artificially low price,” according to the complaint made public on Wednesday in Chicago state court.
Walworth said that it ventured $1.5 Mn in 2006 in Mu Sigma, when it was new and desperate for capital. Later in 2010, the Ryan family agreed to accept $9.3 Mn from the IT firm to buy back the private shares.
According to the complaint, this deal was reached after Rajaram put “deceitful” pressure on Ryan’s son, Patrick Ryan Jr., telling him that Mu Sigma had limited growth potential as it was on the verge of losing its biggest clients.