Hedge Fund Says Morgan 'Mishandled' Natural Gas Trades

Dec 1 2010 | 1:20pm ET

Hedge fund Peak Ridge Capital Group is returning fire in its fight with Morgan Stanley, filing a lawsuit that claims the investment bank "grossly mishandled" its trades.

The countersuit responds to a lawsuit filed last month in which Morgan Stanley accused Peak Ridge of missing margin calls and of taking "extreme risk," leaving the bank with $40.6 million in losses.

Bermuda-based Peak Ridge responded that Morgan Stanley took those losses after "wrongfully" seizing the natural gas portfolio and turning it over to an "inexperienced" trader on its proprietary trading desk. Peak Ridge estimates the losses at $32 million.

The hedge fund also accused Morgan Stanley of "arbitrarily and capriciously" imposing new margin requirements as the value of its portfolio dropped.

A Morgan Stanley spokesman said the firm stands behind its original lawsuit.

Peak Ridge is perhaps best known for briefly employing Brian Hunter, the natural gas trader whose bets destroyed Amaranth Advisors. During his stint at Peak Ridge, Hunter managed money for the fund in question in the Morgan Stanley lawsuits, which managed triple-digit returns in 2008, its first year. But Hunter left the firm after only a few months that year.


In Depth

Q&A: Sancus Capital And The Disruption Of The CLO Market

Oct 5 2017 | 6:28pm ET

Traditional collateralized loan obligation (CLO) funds in the U.S. market can offer...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Finding Success as Alternatives Converge

Oct 9 2017 | 4:00pm ET

Rising interest among institutional investors over the past several years has led...

 

From the current issue of