Wednesday, 24 August 2016
Last updated 20 hours ago
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.”