Trimedyne Chairman Marvin Loeb filed a lawsuit Monday against one of the firm's largest investors, Irving B. Harris, claiming that Harris has violated securities laws in his attempt to oust the chairman.
The suit, filed in U.S. District Court in Los Angeles on behalf of the firm, seeks to halt a Harris-led investment group from continuing a proxy battle to name Harris to Loeb's position at the Santa Ana-based catheter maker.
The suit said Harris violated Securities and Exchange Commission regulations by failing to name former Trimedyne President Michael Henson as a member of Harris' group.
In SEC ownership filings, Harris listed a group of four investors that owns 468,800 Trimedyne shares, or 7.4% of the company. Loeb alleged that Henson, who is a minor stockholder, should have been listed as a fifth member of the group because he is allied with the group in the battle for the chairmanship.
In separate interviews Tuesday evening, Henson and Harris, a Chicago businessman, denied that Henson is a member of the group. Loeb was out of town and could not be reached for comment.
"We don't have a relationship. I was invested in Trimedyne before Harris was," said Henson, who started working at Trimedyne in 1983.
Henson resigned as president last month, saying he had accomplished his goal of establishing Trimedyne as a profitable company. He will vacate his seat on on the board of directors next week.
The battle for Loeb's position became public earlier this month when Harris said he wanted to be elected to Trimedyne's seven-member board and then be named to Loeb's position.
The board has reportedly been split on the choice for a new president.
Last March, the company became the first firm to receive Food and Drug Administration approval to market a laser catheter to treat arteriosclerosis in the legs, and the company reported a profit of $1 million for its fiscal 1988 first quarter, which ended Dec. 31.
Harris said he wants Henson to remain on the board until a new president can be named, but Henson said he will vacate the board seat this month as planned.
Henson said it is unlikely that the company will name a president by the end of the month.
"Recruiting is at a standstill," he said. "It's difficult to find a president in the middle of this infighting."