Tuesday, 27 January 2015
Last updated 42 min ago
Dec 9 2010 | 12:43pm ET
Titan Capital Management is suffering through a second half straight out of 2008—and now faces an investor lawsuit because of it.
The New York-based firm's flagship fund is down by double-digits this year, and a defensively-positioned share class of the Global Return Fund is down more than 70% in just the second half, according to the lawsuit, filed by a Tradex Capital fund that invested $3.5 million in the share class.
According to Tradex, Titan chief Russell Abrams misled it when it filed a redemption request this summer. But the Greenwich, Conn.-based firm said that Abrams assured it he had "adjusted the size of the defensive positions" to reduce the fund's risk.
He convinced them: Tradex added $1.2 million to its Titan investment in the weeks after that conversation. But they should have stuck with their gut: The Class M shares lost another 16% in July and 53% in September, and is now down 60.85% on the year.
The overall Global Return Fund is down 33%, according to Forbes.
Tradex alleges that Abrams "fraudulently misrepresented the risk strategies, investment procedures and objectives as well as Abrams' intended personal investment"—the hedge fund honcho allegedly assured investors that he was adding another $15 million to his own investment in the fund, but never did. What's more, according to Tradex, Abrams admitted in October that "the pressure got to me and the team around me was not helping me. I made several trading decisions that, although each appeared to provide good risk-reward profile, cumulatively assumed significant risk."
Tradex, which says it lost $2.6 million, is seeking $1.4 million and interest. Mark Hyland, a lawyer for Titan, dismissed the lawsuit as "the actions of a serial plaintiff who is happy reaping gains but blames others when its performance declines."
Certainly, Tradex has found itself in court a few times in recent years over investments it undoubtedly regrets making. The fund was victimized by the Thomas Petters Ponzi scheme and has also sued Southridge Capital Management, which has found itself under investigation for alleged market manipulation and has been sued over unfilled redemptions.
Of course, Titan and Abrams are no strangers to the courtroom, either. Abrams and his wife, as well as several other Titan officials, including Abrams' brother, have been sued by a pair of former employees who allege sexual harassment.
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…