American Apparel Founder’s Fraud Claim Tossed in Hedge Fund Suit

A securities fraud claim brought by the former CEO of American Apparel Inc. is precluded by a Delaware court order requiring him to repay around $20 million that he borrowed from a hedge fund in an attempt to regain control of the company, a California appeals court said Tuesday.

Dov Charney was ousted from the clothing retailer by its board of directors in 2014 over misconduct and mismanagement concerns. Charney said hedge fund Standard General LP approached him shortly after and offered an opportunity for him to regain control of the company.

Standard General allegedly loaned Charney approximately $20 million ...