Highland Sues RBS Over 'Deceptive' CDO Deal

Jul 1 2011 | 12:41pm ET

Six months after losing a court battle with the Royal Bank of Scotland on the bank's home turf, Highland Capital Management has sued RBS on its own—for more than three times as much as it was ordered to pay in December.

The hedge fund sued the bank in Dallas federal court over a collateralized debt obligation that Highland crafted with RBS financing, The Telegraph reports. The deal failed to close when the markets collapsed in 2008, leading RBS to call in its loans.

In December, a British judge sided with RBS, ordering Highland to cover the €22 million difference between the value of the loans after the deal failed and the outstanding financing. But the judge also gave Highland ample ammunition for its new lawsuit, blasting RBS' behavior.

Justice Michael Burton accused the bank of "deception" and running a "sham" auction. He also alleged that Sam Griffiths, former head of high-yield trading at RBS and one of two individuals named in the Highland suit, "knowingly" lied to clients.

Highland picked up where Burton left off, accusing RBS of fraudulent inducement, fraud and unjust enrichment. RBS has asked the court for an injunction against the case being heard in Texas.


In Depth

David Yarrow On Growing His Hedge Fund And Shooting The Animals And People Of Africa - As A Photographer

Jul 23 2014 | 6:44am ET

While he’s always been a photographer, recent expeditions to Iceland, Ethiopia...

Lifestyle

Einhorns Busts At WSOP, Finishes In 173rd

Jul 15 2014 | 10:48am ET

Greenlight Capital founder David Einhorn’s World Series of Poker won’t end at...

Guest Contributor

Common Risk Parity Misperceptions

Jul 16 2014 | 11:02am ET

Over the past few years, risk parity has become a component of most investors’...

 

Sponsored Content

    Northern Trust Helps Hedge Funds Navigate Derivatives Regulations

    Jul 8 2014 | 10:48am ET

    The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…

Publisher's Note