Top 2010 Hedge Fund Manager, Former Trader Face Off In Court

Feb 14 2011 | 11:18am ET

Don Brownstein, whose $2 billion, Stamford-based Structured Portfolio Management was Bloomberg’s top hedge fund of 2010, is suing former SPM managing director and trader Jeff Kong for $10 million—but Kong has responded with a $74 million suit of his own.

The SPM suit, filed in December 2010, claims Kong violated a non-compete clause when he left SPM in May 2010 and went to work for San Francisco-based Passport Capital.

Kong lawyer Jonathan Sack of New York-based Sack & Sack, however, told the Connecticut Post Kong was owed $74 million for his performance at SPM and moreover, the non-compete clause was too broad as it prevented Kong from “working globally.” In effect, said Sack, requiring Kong to leave the planet to earn a living.

SPM’s attorneys wrote in their complaint that failure to uphold Kong’s contract could harm its business and set a precedent for other firms with similar non-compete clauses. Brownstein is suing Kong for the return of a $5 million bonus from 2010 and a $5.8 million disbursement from the fund’s Q1 2010 profits.

SPM earned 50% returns in 2010 betting on mortgage-backed securities. The most interesting aspect of the case is Kong’s compensation claim—in demanding $74 million, he is basically claiming credit for SPM’s success.

SPM’s attorneys have moved to seal Kong’s counterclaim, saying it reveals “highly confidential and proprietary information belonging to Plaintiffs in the public record, including… confidential trading and investment strategies, methodologies, and information related to Plaintiffs' management, clients and business of Plaintiffs."

Another Kong attorney, Eric Grayson of Greenwich-based Grayson & Associates, who argued for keeping the counterclaim open, told a CT reporter the reality behind the case is that Brownstein “screwed up. He fired his top trader and he knows it.”


In Depth

Why Ponzi Schemes Work: An In-Depth Look At The Allen Stanford Fraud

Dec 21 2014 | 10:30am ET

Texan Allen Stanford first appeared on the radars of financial regulators in 1997...

Lifestyle

Cooper-Hohn Won't Contest Divorce Settlement

Dec 18 2014 | 9:51am ET

The ex-wife of hedge fund billionaire Christopher Hohn will not contest a divorce...

Guest Contributor

Controlling With Confidence: A ‘How-To’ For Hedge Fund Managers

Dec 22 2014 | 11:52am ET

Hedge funds are increasingly turning to third party services to help with operations...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.