3.7% SVVC Shareholder Rawleigh Ralls Issues Statement to Firsthand Technology Value Fund Directors Kimun Lee, Greg Burglin, ...
May 20 2021 - 12:46PM
The following is a statement from Firsthand Technology Fund
(Nasdaq: SVVC) 3.7% shareholder Rawleigh Ralls regarding his views
on the Fund's independent board members, Kimun Lee, Greg Burglin,
Nicholas Petredis and Rodney Yee and the Fund's performance. Mr.
Ralls believes have each sat on the Board of SVVC for most or all
of the Fund’s life. Mr. Ralls believes these Directors have
presided over an "epic failure of fund management performance in
seemingly unblinking fashion."
- For the nearly 10 years that these individuals have
served as directors, SVVC’s share price declined
78% through year-end 2020.
- Despite this performance, the Board has repeatedly
renewed the contract with the Fund’s advisor, Firsthand Capital
Management, led by Kevin Landis.
- Mr. Ralls believes these Board members also "rubber
stamped unconscionable fund management fees" totaling $33.8M over
nearly ten years, yet SVVC’s market cap has shriveled to just
$42M.
- For this work, over most of the last 3 years, SVVC directors
have been paid $50,000 per year, up 150%
from $20,000 per year in 2016, "despite SVVC’s death spiral
destruction of shareholder value," added Mr. Ralls.
- SVVC’s Code of Ethics states that directors “owe a fiduciary
duty to fund shareholders. This means a duty of loyalty, fairness
and good faith toward the shareholders, and a corresponding duty
not to do anything prejudicial to or in conflict with the interests
of the shareholders.”
Looking beyond the technical definition of “independence” used
for the SVVC board, each of these purported “independent
directors” has collected or is collecting additional fees
at other Firsthand entities:
- Lee has been a trustee of 2 other Firsthand Funds since
2013.
- Yee was a trustee for 2 Firsthand Funds from 2010-2013.
- Burglin has been a trustee of 2 other Firsthand Funds since
2008.Prior to joining SVVC’s board, Petredis served as Chief
Compliance Officer for Firsthand Funds from 2008 to 2013 and Chief
Compliance Officer of SVVC.
Unfortunately, while shareholders have for years spoken and
asked for change, the board has not listened. Last year
shareholders voted significantly in favor (more than 2 to 1) of a
non-binding proposal that the board seek any and all measures to
enhance shareholder value, including: (1) orderly
termination of the fund, (2) orderly liquidation of SVVC assets
with distribution of available cash to shareholders, (3) tender
offers for SVVC shares using available cash from any and all
investment exits, (4) merger of the fund into an entity offering
shareholder exits near net asset value (NAV), or (5) other measures
likely to allow shareholders to exit SVVC near its NAV.
One year later and nothing has happened.
This year there is a similar but Binding Proposal to
terminate Firsthand’s contract as the Advisor to the Fund
(which would eliminate $2M+ in annual fees earned while failing
their shareholders).
Two-thirds (2/3’s) of voting shareholders must cast
their vote in favor of this proposal for it to pass, and
it is believed that that Mr. Landis is allowed to vote his nearly
10% share holding in opposition to this proposal, despite his
obvious conflict of interest.
But the vote should not even matter!
A truly independent and sentient Board has ample reason to
replace Firsthand Capital Management and Mr. Landis, given:
- "The dismal share price performance since inception,"
- "The market’s disdain for SVVC, its management and portfolio" –
as the fund currently trades at a 60% discount to stated NAV,
and
- Firsthand continues to employ “sell winners early” and “throw
good money after bad” strategies "to prop up failing portfolio
company valuations and support higher management fees."
Replacing Firsthand Would be Neither Difficult Nor
Costly
- It will not be difficult transitioning to a new fund
advisor.
- There are plentiful options to replace Firsthand with those
with better qualifications, performance and lower fees.
- A new advisor would bring desperately needed fresh perspective
and assistance with portfolio company analysis, investment strategy
and fundraising – that has been sorely needed for many years.
- SVVC shareholder Rawleigh Ralls has volunteered to help in an
advisor transition – free of charge.
Rawleigh Ralls is a successful and experienced board member and
investor and a significant SVVC shareholder. He has multiple
options for constructive changes for the board to consider. He
implores the Board to be accountable to their shareholders, to
eliminate any conflicts of interest and to uphold their fiduciary
duty by acting immediately to bring needed change to the leadership
of Firsthand Technology Value Fund.
IMPORTANT INFORMATION CONCERNING THIS COMMUNICATIONThis press
release is being issued pursuant to Rule 14a-2(b)(1) promulgated
under the Securities Exchange Act of 1934. This is not a
solicitation of authority to vote your proxy. I am not asking for
your proxy card and will not accept proxy cards if sent. The cost
of this communication is being borne entirely by Rawleigh
Ralls.
Contact:Rawleigh
Rallsrallsrawleigh@gmail.com
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