Pyrrhic Victory For RBS In Highland CDO Dispute

Dec 15 2010 | 2:42am ET

It took a few tries, but the Royal Bank of Scotland has won a collateralized debt obligation lawsuit against hedge fund Highland Capital Management.

A British court awarded the bank about £19 million, six months after first deciding in the bank's favor. Still, Justice Michael Burton failed to grant RBS everything it wanted; in September, the bank asked for about €40 million, what it claimed was the entire amount of its loss. RBS was also ordered to pay its own costs.

At issue was a CDO that did not close because of the "collapse of the financial markets" two years ago. The judge said that Highland should cover the difference between the amount of its outstanding financing for the failed CDO and the value of the loans its seized when it called in the financing.

But the judge also took aim at RBS, accusing it of "deception" and Sam Griffiths, head of European high-yield trading, of lying. RBS is now investigating Griffiths.

The bank remains embroiled in a lawsuit with Highland in New York, where RBS accused Highland of deceiving it into restructuring a CDO.


In Depth

Q&A: Rotation Capital's Rothfleisch On SPAC 2.0

Aug 11 2017 | 7:43pm ET

Corporate actions have long been a staple of event-driven investors, but activity...

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

Star Mountain: Private Lending in the Lower Middle-Market

Aug 14 2017 | 4:45pm ET

Private credit has become one of the most popular alternative asset classes in recent...

 

From the current issue of