Hedge Fund Says Morgan 'Mishandled' Natural Gas Trades

Dec 1 2010 | 12:20pm 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

GSAM's Papagiannis: Liquid Alternatives For The Long Run

Apr 21 2017 | 8:44pm ET

Interest in liquid alternatives cooled a bit last year amid a broad shift in investor...

Lifestyle

Aston Martin Returns To Debt Market As DB11 Drives Turnaround

Mar 31 2017 | 5:21pm ET

James Bond’s preferred carmaker is returning to the public debt markets for the...

Guest Contributor

Debunking Conventional Investment Wisdom (Part II)

Apr 17 2017 | 5:56pm ET

The alternative investment industry is currently replete with buzzwords around data...

 

From the current issue of