Plainfield Again Accused Of Misdeeds

Dec 27 2010 | 2:19am ET

Another would-be whistleblower is taking aim at embattled hedge fund Plainfield Asset Management.

John Wust, an investor in a company controlled by the Stamford, Conn.-based hedge fund, accused the firm of insider-trading and striking a deal with Wolverine Tube to raise money in a stock offering while simultaneously planning to declare bankruptcy, thereby wiping those new shareholders out. Wust says he lost $500,000 as a result of Wolverine's recent bankruptcy filing.

Wust has asked the Securities and Exchange Commission to look into his allegation that Plainfield "used 'insider' information to sell shares of common stock to the public knowing it would take actions to deliver the company into its own ownership as a 'note holder'" via the bankruptcy filing.

It is the second whistleblower suit to hit Plainfield in recent months. In August, a lawyer accused the hedge fund and founder Max Holmes of "knowingly and intentionally" defrauding its investors by inflating asset values to collect higher fees.

Plainfiled is also the subject of predatory lending probes by both the Manhattan district attorney and Connecticut attorney general.

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