Judge Rules Against Sofaer In Wireless Lawsuit

Jun 15 2011 | 2:28am ET

Sofaer Capital is going to have to make due without the $10 million it lent to a Hong Kong-based wireless communications company four years ago.

A federal judge in Indianapolis dismissed the London-based hedge fund's 2009 lawsuit against mobile phone company Brightpoint, alleging that the company defrauded Sofaer into making the loan to Chinatron Group Holdings. According to Sofaer, Brightpoint CEO Bob Laikin was a founding shareholder of Chinatron, which was in danger of defaulting on its loan from Brightpoint.

"If Chinatron could not repay its debt to Brightpoint by the end of 2007, Brightpoint would be forced to record it as 'bad debt' on its books, which would be subject to scrutiny by Brightpoint's audit committee, a situation Laikin very much wanted to avoid," the hedge fund alleged in its lawsuit.

Sofaer came to the rescue, lending Chinatron $10 million—which it used to repay Brightpoint—on the expectation it would get a $12 million repayment a few months later, after Chinatron sold its Mobiltron France subsidiary to Brightpoint.

But the deal never happened, even though Sofaer alleged that Laikin called the Mobiltron transaction "as good as a done deal."

That claim wasn't good enough for U.S. District Judge Tanya Walton Pratt, who wrote, "Sofaer simply had to understand that there was some risk that the deal would fall apart. Apparently, though, Sofaer was blinded by rose-colored glasses, believing that a deal in its infancy was actually carved in stone."


In Depth

Q&A: Open Season For Closed-End Funds

Aug 29 2014 | 10:00am ET

When Maury Fertig and Bob Huffman, former Salomon Brothers coworkers, launched...

Lifestyle

Och Funds Women In Finance Initiative At U-M

Aug 28 2014 | 3:01pm ET

Och-Ziff Capital founder Daniel Och and his wife have made a "generous donation"...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

New customer protection rules have landed: Are you ready?

The twin debacles of MF Global and PFG have damaged the reputation of the futures industry demanding an examination of customer protection rules. New rules are being implemented, which will add cost a...

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.