Cavaliers Governor Dan Gilbert Sued by Pension Fund over Alleged Insider Trading

Timothy Rapp@@TRappaRTFeatured ColumnistDecember 8, 2021

FILE - In this Nov. 1, 2018, file photo, Cleveland Cavaliers owner Dan Gilbert speaks during a news conference in Cleveland about the 2022 NBA All -Star game. Gilbert has been home for nearly a week in Detroit as he continues to recover from a stroke suffered in May. He had spent the past two months in a rehabilitation center in Chicago. On Thursday, Aug. 22, 2019, Quicken Loans CEO Jay Farner provided a brief update on the 57-year-old billionaire businessman. (AP Photo/Tony Dejak, File)
Tony Dejak/Associated Press

The Police & Fire Retirement System pension fund in Detroit is suing Cleveland Cavaliers governor Dan Gilbert and accusing him of insider trading for selling them $500 million in Rocket Companies stock in March that quickly devalued, per Sean McDonnell of Cleveland.com.

The pension fund is claiming that Gilbert knew the stock price of Rocket Companies would fall after the sale, allowing him to avoid $165 million in losses by selling when he did. On March 29, the shares sold for $24.75 apiece. By May 13, they had dropped to $16.58 and sat at $16.31 apiece on Tuesday.

Per that report:

"Rocket had predicted 'blockbuster' growth in early 2021, but in May reported lower expectations that caused the stock price to fall, according to the lawsuit. The suit claims Gilbert would have been aware of Rocket's results in real-time, and that those results were discussed at a March 10 company meeting, more than two weeks before he sold the stock to the pension fund."

Rock Holdings, the parent company of Rocket Companies, denied the accusations.

"The claim that Dan Gilbert, the company's founder and chairman, acted using information not available to the public is false and preposterous," spokesman Aaron Emerson said in a statement.

"We will defend the strong reputation we have built for doing the right thing over the last 36 years and hold accountable anyone who makes false claims or attempts to tarnish our company, our founder or the hard work of our 26,000 team members," the statement added.

Gilbert, alongside Ron Berman, Lindsay Gross and Gary Gilbert, founded Rock Financial in 1985, a mortgage loan provider. It would later be named Quicken Loans in 1999 before going public in 2020 under the name Rocket Companies.