(Bloomberg) -- Walt Disney Co. doesn’t have to turn over records about its ties to ValueAct Capital Management and the activist investor’s role in a bitter proxy fight at the over the entertainment giant’s board, a Delaware judge concluded.

Blackwells Capital, which sued to get the records, couldn’t show there were “legitimate issues of wrongdoing,” so it should be blocked from seeing the internal files, Delaware Chancery Court Magistrate Judge Selena Molina said Wednesday. Her recommendation won’t become final until it is affirmed by a chancery court judge. 

Blackwells wanted the records because it was concerned Disney may have provided inducements to win ValueAct’s support in the proxy fight. It asked for details of Disney’s financial ties to ValueAct, which managed more than $350 million of Disney pension monies over a 10-year period before stepping down in 2023. 

“You can’t gain access to the files just because you think somebody within the company may have misstepped,” said Larry Hamermesh, a retired University of Pennsylvania law professor who specializes in Delaware corporate disputes. “You have to have some tangible evidence to back up your request. Apparently, they didn’t here.”

The judge’s decision may dampen New York-based Blackwell’s appetite for filing a lawsuit to probe whether Disney offered inducements to ValueAct to win its proxy support. Disney has acknowledged it had an information-sharing agreement with ValueAct during the proxy battle. The fund holds Disney shares.

Representatives for Blackwells and Disney declined to comment. 

Blackwells officials allege Disney executives failed to properly disclose financial ties to ValueAct before ValueAct backed Disney’s director candidates and are refusing to turn over relevant files. Disney said it had turned over some records and didn’t have anything else about the relationship. 

In her decision, Molina found Blackwells’ complaints about Disney disclosures amounted to “nitpicking.”

Along with fellow activist Disney investor Nelson Peltz, Blackwells is pushing for board changes opposed by the entertainment company. Disney’s slate of candidates got the public backing of ValueAct and its Chief Executive Officer Mason Morfit earlier this year. 

Peltz’s Trian Fund has questioned current Disney CEO Bob Iger’s management of the company and taken particular issue with what he calls the company’s “woke film strategy.” Peltz unsuccessfully backed his own slate of candidates for the Disney board slots in the proxy fight. The billionaire had sought a spot on Disney’s board for himself.

The case is Blackwell Onshore LLC v. The Walt Disney Co., 2024-0321, Delaware Chancery Court (Wilmington) 

(Updates with comment from law professor, companies declining comment. An earlier version corrected the day of the judge’s decision.)

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