Hedge Fund Lawsuits
Hedge Fund Lawsuit | Legal Actions
Quick Link: Hedge Fund Regulation Corner(http://HedgeFundBlogger.com) Perhaps more dangerous than a wave of further redemptions in the hedge fund industry would be a wave of legal actions. With gates dropping as fast as assets at many hedge funds investors may be often left with locked-up assets, partial withdrawals, steep losses or all three. The last thing the industry needs is a wave of 500+ lawsuits against hundreds of the top managers in the industry. Most hedge funds are relatively short on staff as it is and legal battles can keep managers from trading and raising capital as they should.
Here is a story excerpt about Amaranth and their lawsuit against JP Morgan and their prime brokerage division:
Remember the days when a hedge fund losing billions was news? Wise men would knot up their brows and wonder if hedge funds weren’t too loosely regulated or were creating some kind of systemic risk. After what we’ve been through in the past year that all seems like the good old days.
We were reminded of this today when we discovered that Amaranth’s lawsuit against JP Morgan Chase was still going on. It seems like a lifetime ago that the fund run by Nick Maounis imploded amid bad bets on natural gas. It was the trade that made Brian Hunter, Amaranth’s lead energy trader, famous. Amaranth lost $6 billion, collapsed, and sold its assets to JP Morgan and Citadel.
Afterwards, there were recriminations in all directions. Hunter is said to blame Maounis for not having the available cash to cover the margin calls. Maounis, for his part, felt he was done in by nefarious deeds at his prime broker, JP Morgan. Those feelings because a lawsuit, of course. Read more...
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