A venture capital firm executed an in-kind distribution shortly after taking a portfolio company public. The shares designated for distribution, as a matter of normal business practice, were placed in the custody of a third party. Due to a processing error, several limited partners were not notified about the stock distribution and that the portfolio company shares were Continue Reading …
Nervous Investors Apply Pressure to Independent Fund Directors
November 1, 2010 By
An offshore hedge fund, after experiencing issues with poor performance and liquidity issues, suspended redemptions in accordance with its fund documents. However, certain investors demanded that their redemption requests be honored and pressed the fund directors to address their concerns. The independent directors of the hedge fund determined that they had a legal responsibility to take action, and Continue Reading …
SEC Investigates Alleged Securities Violations
November 1, 2010 By
The Securities and Exchange Commission launched a formal investigation pursuant to a formal order of investigation against a hedge fund manager for possible securities violations by the manager in connection with trading securities held by the fund. The firm hired legal counsel to assist in responding to the SEC’s requests over the course of a Continue Reading …
Unauthorized Trade
November 1, 2010 By
A claimant alleged that several unauthorized trades were processed from his accounts through the adviser, totaling over $250,000. The claimant sought to have his accounts reinstated as if the unauthorized transactions did not occur. Additionally, the claimant sought the increase that his stocks would have earned during the rise in the market during that period. Total Cost: $200,000.
Stock Bounced the Wrong Way
November 1, 2010 By
An investor placed over $100,000 of assets with an investment advisory firm. The adviser purchased a certain distressed stock. The investor questioned the investment, but the adviser assured him that this stock always “bounced” back and produced positive returns for his clients. The investor lost over $50,000 in the investment. The investor sued alleging that the adviser was Continue Reading …
Not the Client’s Intention
November 1, 2010 By
An investment adviser had discretionary authority over approximately $75 million of the client’s assets. The employee in charge of the account believed that the client intended that the account be used as a hedging fund for the rest of the client’s investments and therefore took a substantial short position in U.S. Treasury securities. As interest rates rose, the Continue Reading …
Failure to Make Contributions
November 1, 2010 By
A claimant alleged that her adviser failed to effectuate any contributions to her retirement plans over a four year period, and that she did not obtain the employer match that was available for these periods. The claimant also alleged that the mutual funds in her account were not actively managed, and that several investments selected by the adviser Continue Reading …
Contract Stipulation Overlooked
November 1, 2010 By
An investment adviser managed a large public pension retirement fund. The fund manager sent a letter to the adviser stating that the adviser’s contract was being terminated at the end of the business day and instructing the adviser to cease trading at that time. That day the adviser liquidated the portfolio of thinly traded securities and put approximately Continue Reading …
Laid-Off Employee Wins Harassment Suit
November 1, 2010 By
An employee was terminated by an investment adviser as part of a company-wide reduction in force. The former employee later sued the investment adviser and her former manager, alleging sexual harassment, intentional infliction of emotional distress, wrongful termination and sex discrimination. She sought $375,000, plus reimbursement of legal fees. The company responded by stating the ex-employee’s termination was Continue Reading …
Conflict of Interest in Stockbroker’s Suit
November 1, 2010 By
A stockbroker and her employer were accused of churning an account (buying and selling a client’s stocks too frequently in order to generate more commission, rather than reasonably buying and selling in the best interest of the client). This resulted in a loss to the client’s portfolio of $375,000. In-house counsel represented both the individual broker and her Continue Reading …