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

Financial Industry Blockchain Consortium R3 To Open-Source Platform Code

Oct 20 2016 | 9:03pm ET

Bitcoin's blockchain technology has spawned a flurry of activity among fintech startups...


U.S. Trust's Beard: The Rapid Growth of the Art Lending Industry

Oct 7 2016 | 10:55pm ET

Alternative investment managers have emerged as some of the most significant art...

Guest Contributor

Hedge Fund Marketing – Tips for Your Initial Sales Meeting

Sep 29 2016 | 5:46pm ET

There are two main goals a hedge fund should have for an initial in-person sales...