After Suing Hedge Fund, NIR Investors Sue Each Other

Aug 2 2010 | 1:13pm ET

Not content with suing NIR Group alone, two of the embattled hedge fund’s investors have sued each other.

Hull Capital Management and Highmount Olympic Fund, a pair of hedge funds themselves, are battling over the size of Highmount’s investment in Hull’s PIPE Equity Partners. Last January, Highmount traded its investment in an NIR fund, AJW Qualified Partners II, to PIPE Equity in exchange for a stake in that fund of PIPE funds. At the time, Highmount’s investment was valued at $4.6 million.

In its lawsuit, Hull claims that that value was merely provisional as investors waited on the AJW fund’s 2008 annual audit. That audit never came—thanks to what Hull, in its lawsuit against NIR, calls “AJW’s fraud and misrepresentations”—and the $4.6 million value of Highmount’s AJW stake was “substantially overstated.” Hull has written down PIPE Equity’s investment in AJW to just 30% of its last stated net asset value.

In its countersuit, Highmount accuses Hull of “buyers’ remorse” and claims that its agreement with Hull doesn’t allow the firm to adjust the value of its investment without the missing audit, and “imposes no deadline by which AJW’s annual audit will be issued.”

Highmount wants a court to affirm its stake in PIPE Equity and award it $5 million for breach of contract. Hull wants the court to toss its agreement with Highmount or allow it to cut its stake.

Federal authorities are currently investigating whether NIR or founder Corey Ribotsky misled investors or paid kickbacks to people in exchange for helping it inflate the value of some of its hedge funds. Neither NIR nor Ribotsky has been accused of any wrongdoing, but a former NIR analyst last month pleaded guilty to taking kickbacks and fraud, and investors have accused NIR of essentially making up its returns.


In Depth

High Time For A Cannabis Hedge Fund?

Sep 30 2014 | 7:07am ET

Launching a hedge fund is always a gamble, but Leslie Bocskor's decision to launch...

Lifestyle

Griffin Donates $1M To Rauner's Illinois Gov. Campaign

Sep 22 2014 | 9:29am ET

Hedge fund billionaire Kenneth Griffin definitely has a dog in this fight. The Citadel...

Guest Contributor

Appraisal Ratio Key To Evaluating Hedge Funds And Other New Investments

Sep 29 2014 | 3:07pm ET

As a former finance professor Peter Hecht experiences heartburn every time he hears...

 

Videos

Editor's Note

    Must Attend Hedge Fund Charity Events For October

    Sep 30 2014 | 9:29am ET

    The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…

 

Futures Magazine

September 2014 Cover

High frequency market making

High frequency trading is not evil, it is not a conspiracy and it really is not new; it is the natural evolution of the professional trading community making markets, providing liquidity and hopefully...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.