The man who acquired Sound United and founded US Health Company Masimo has been sacked by his own board, and to top that that off Joe Kiani is now being perused via a major lawsuit a alleging, among other things, that he colluded to create RTW Investments a group that Masimo claim violated federal securities laws and tried to fix the recent vote that saw him ousted.

After losing a boardroom battle at a recent AGM Joe Kiani and RTW Investments are facing new problems, as employees at Masimo Consumer the audio and smartwatch Company that was spun out from the main health business waits to hear their fate and if and when the business will be sold or merged.

Shortly after the Companies AGM last month the company announced that Chairman, CEO, and Founder Joe Kiani had resigned from the medical products company he founded.

Toronto , Canada – 20 June 2024; Joe Kiani, Founder, Chairman & CEO, Masimo; on Startup University Stage on day three of Collision 2024 at the Enercare Centre in Toronto, Canada. (Photo By Ramsey Cardy/Sportsfile for Collision via Getty Images)

Kiani also filed a lawsuit against the company in an attempt to force its payment of his contract, which is said to be worth around $400 million.

Last week Masimo notified the SEC that it is reaffirming its previously provided financial guidance for both the third quarter (3Q) and full-year anticipated results.

They also announced that the board has taken the step of officially terminating Kiani’s employment which was seen as an odd move as he had already resigned.

The company said this step was taken, “Following a review by outside counsel…” That official termination is said to be effective as of October 24, 2024.

Kiani was also slapped with a separate legal action alleging that Joe Kiani had a secret agreement with the owner and management of RTW Investments “…to secretly manipulate the outcome of a corporate election in violation of the federal securities laws.”

Because this suit alleges securities law violations, it was filed in the U.S. District Court, Southern District of New York – a well-known court with a long history of hearing landmark cases surrounding securities and financial matters…such as those related to Wall Street.

Masimo claim that they have evidence of alleged wrongdoing by Its Former CEO.

Masimo alleges that by allying with RTW and ultimately acquiring as much as 19% of Masimo’s outstanding stock he was in breach of laws in the US governing share listed Companies.

Masimo have pointed out that they have ‘damning evidence’ in the form of a photo of a whiteboard showing the vote totals of major Masimo investors – non-public info for proxy participants only.

In the red box you see RTW listed at 10% (when official disclosures had them at 2.8%) and BlackRock at 9% (official disclosures show 16%).

Kiani showed this plan putting his votes at 55%. He sent this photo to RTW.

Specifically, the lawsuit includes a photo of a whiteboard that lists the voting totals for multiple large Masimo shareholders – information provided for the proxy participants only – that Kiani sent to an RTW executive to share with them what he expected would be the final vote tally.

Masimo superimposed a large red box to highlight particularly damning information, wrongly shared with a non-proxy participant investment company.

The health Company is requesting the courts:

a. Declaring that Defendants formed a group within the meaning of Section 13(d) of the Exchange Act.
b. Requiring Defendants to disgorge all short-swing profits made as a result of their group’s empty voting scheme in violation of Section 16(b) of the Exchange Act
c. Awarding Plaintiff its attorneys’ fees and costs as provided by law.
d. Awarding all such further relief as the Court deems just and proper.
A Powerful and Significant Threat to Kiani & RTW

If the court agrees with Masimo and declares that the defendants had in fact formed a Section 13(d) group, then they will be in violation of several statutorily mandated notifications.

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