Tuesday, 21 October 2014
Last updated 1 hour ago
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.
Sep 22 2014 | 4:15pm ET
"I tell people that everybody likes good news and so if you have good performance that’s wonderful,” explains Mike McKitish of Peddie School's endowment, “but it’s the people that want to talk about the bad news or where they drifted and how they came back and how they stayed to their discipline…” that he wants to hear from. Read more…
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…
Most traders agree that proper risk management is the key to successful trading. However, many traders depend on the deeply flawed measure of standard deviation as a benchmark of risk. Here we put it ...