Angry Money Manager Sues Author, Eisman Over ‘Big Short’ Claims

Mar 1 2011 | 1:44pm ET

A New Jersey hedge fund manager has sued the author Michael Lewis and FrontPoint Partners’ Steven Eisman for, in effect, making him look stupid.

Harding Advisory’s Wing Chau accused Lewis and Eisman of defaming him in Lewis’ bestselling book, The Big Short: Inside the Doomsday Machine. Lewis’ book, which was released a year ago, covered the rise and fall of the housing bubble and the creation of the credit default swap market.

According to Chau, the book depicts Eisman—who made a killing on the collapse of the mortgage market—as a far-sighted hero, while Chau, in a reported conversation with Eisman, comes off less well.

“The entire passage depicts Mr. Chau as someone who ignored his professional responsibilities, made misrepresentations to investors, charged money for work that was not performed, had no stake in the [collateralized debt obligations] he managed, was incompetent or reckless in carrying out his responsibilities, and violated his fiduciary duties by putting the interests of ‘Wall Street bond trading desks’ above those of his investors,” the lawsuit alleges. Chau says those conclusions, drawn from Eisman’s statements and memory, are untrue.

Lewis’ book depicts Chau and others as “villains” who were “responsible for the crisis,” Chau alleges.

As for Eisman, Chau’s lawsuit throws about some allegations itself, saying the FrontPoint star manager “has a well-known reputation for being offensive. Even on Wall Street, people think he’s rude, obnoxious and aggressive.”

Chau is seeking “redress” in the form of unspecified damages.

“Suits like this one are an unfortunate fact of life in our industry, particularly when a book is as successful as this one has been,” Drake McFeely, president of Lewis’ publisher, W.W. Norton & Co., said. McFeely said he was confident that the lawsuit would be dismissed.


In Depth

Q&A: Decathlon Capital On Revenue-Based Alternative Lending

Oct 30 2017 | 3:49pm ET

The explosion in private credit activity since the end of the financial crisis is...

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

Saxby: Not All EBITDA Is Created Equal

Nov 30 2017 | 8:02pm ET

Record levels of dry powder are driving competition among private equity firms to...