Armistice Capital Overcomes Novel Ruling in Aytu Stock Case (1)

Armistice Capital LLC defeated insider trading claims over its Aytu BioPharma Inc. stock sales Thursday, overcoming a first-of-its-kind court ruling that rejected the hedge fund’s initial bid to end the case.

A Delaware judge dismissed allegations that Armistice looted the biotech by forcing it to acquire two unprofitable affiliates, then unloading its own shares at prices inflated by a Covid-19 testing deal. Despite its 41% stake and board representation, Armistice didn’t exert enough influence at Aytu to count as a controlling stockholder with fiduciary duties, Vice Chancellor Morgan T. Zurn said.

The hedge fund “did not control the board, dictate ...