Attorneys for the chief financial officer of a merchant cash advance company accused of fixing finances said a former general counsel does not have standing to file a shareholder derivative suit because he had his shares repurchased.

In December, Steven Berkovitch filed suit against Oded Segev, the CFO of Delaware-based Five Hole, claiming breach of fiduciary duties, unjust enrichment and conversion. Specifically, Berkovitch, who was the general counsel for Pearl Capital Business Funding, a company owned by Five Hole, created a law firm, Berkovitch & Bouskila, to make collections for the company and for other companies looking to outsource the work as a way to bring himself and Pearl Capital more revenue. Berkovitch also had a small stake in the company.