Whistleblower Greenlight To Share In Settlement Spoils

May 7 2010 | 3:27am ET

Greenlight Capital has won another victory over private equity firm Allied Capital Corp., as a former Allied portfolio company has settled charges that it defied federal regulations.

The New York hedge fund had sued Business Loan Center, now called Ciena Capital, and its parent, Business Loan Express, accusing the business lender of certifying that it complied with Small Business Administration Rules when it, in fact, did not. Greenlight and its co-plaintiff, James Brickman, brought a so-called whistleblower suit against Ciena, which allows private citizens and companies to sue on behalf of the U.S. government.

Greenlight and Brickman will split $4.3 million of the $26.3 million settlement, which also resolves Greenlight’s demand that Allied Capital be held accountable for Ciena’s wrongdoing.

Ciena’s failure to heed the SBA rules emerged after several federally-backed loans the firm made and serviced defaulted. One of its former executives has been sentenced to 10 years in prison for his role in the fraud.

The settlement still requires the approval of a federal bankruptcy judge, who will hold a hearing next month.

In Depth

Financial Industry Blockchain Consortium R3 To Open-Source Platform Code

Oct 20 2016 | 9:03pm ET

Bitcoin's blockchain technology has spawned a flurry of activity among fintech startups...


U.S. Trust's Beard: The Rapid Growth of the Art Lending Industry

Oct 7 2016 | 10:55pm ET

Alternative investment managers have emerged as some of the most significant art...

Guest Contributor

Hedge Fund Marketing – Tips for Your Initial Sales Meeting

Sep 29 2016 | 5:46pm ET

There are two main goals a hedge fund should have for an initial in-person sales...