Highland Denies Pension Lawsuit's Claims

May 26 2011 | 4:02am ET

Highland Capital Management has blasted a new lawsuit against it as an attempt to benefit one investor at the expense of the Dallas-based firm's other clients.

The Houston Municipal Employees Pension Scheme has accused Highland of reducing its own stake in its flagship Crusader Fund by more than 95% after it froze redemptions, "[stripping] the master fund of its investment-grade assets, leaving it with only junk-rated (or unrated) investments." The pension had invested $15 million in Crusader, which collapsed in 2008.

Highland, however, disputes the story of an aggrieved investor, calling the lawsuit "a single plaintiff's law firm attempting to create financial leverage for one party's benefit at the expense of all other investors." Indeed, Highland said the lawsuit seeks to "derail the successful, investor-driven process that led to the recent, equitable resolution for the Highland Credit Strategies hedge fund," which also collapsed in 2008. Highland said the same law firm also sought to block that deal.

The hedge fund also denied that it had reduced its exposure to the Crusader fund, putting its current investment at between $90 million and $110 million.

"Highland has worked tirelessly in the best interest of all investors," the firm said. "As soon as the resolution from the investor-led process is approved, which we believe will happen imminently, we expect this meritless lawsuit to be dismissed."


In Depth

FINtech Focus: Fundbase Aims To Revolutionize Access To Hedge Funds

Jan 23 2015 | 11:03am ET

Global investment in financial technology—also known as fintech—is booming....

Lifestyle

Looking For A Hedge Fund Manager? Try Davos

Jan 28 2015 | 8:48am ET

Davos, Switzerland seems to have become the hedge fund capital of the world—at...

Guest Contributor

From Switzerland With Love: Some Hard Truths About Central Banks And Risk

Jan 23 2015 | 7:54am ET

In the wake of the Swiss National Bank uncoupling the country’s currency from...

 

Editor's Note