Thursday, 29 September 2016
Last updated 1 min ago
Dec 3 2010 | 10:59am ET
Southridge Capital Management, the hedge fund accused in October of overvaluing its portfolio, has been sued again, by an investor.
Fund of hedge funds Pine Street Associates, which is co-managed by Omega Advisors' Leon Cooperman, has asked a New York court to confirm an arbitration award ordering Southridge to fill an $8 million redemption request. Pine Street, which manages $140 million, sought to pull its entire investment with the Connecticut hedge fund more than two years ago.
Last April, Pine Street sought $8 million in arbitration, which led Southridge to pay the fund of funds $88,797. But in January, the arbitrator in the case sided with Pine Street, ordering Southridge to fill the rest of the redemption.
Southridge said it has done just that, giving Pine Street $3 million and a significant amount of stock. But, the hedge fund said, it "refused to pay Mr. Cooperman what he demanded out of the funds held for other investors, and that refusal evidently caused Cooperman, in retribution, to continue this matter in the courts notwithstanding that it was already resolved in arbitration," Southridge said.
In October, both the Securities and Exchange Commission and Connecticut attorney general sued Southridge, accusing the hedge fund of cooking up a bogus value for its largest holding based on that company's acquisition of two companies controlled by Southridge CEO Stephen Hicks. Southridge and Hicks are also accused of ignoring redemptions for as long as 10 years.