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

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

The time was right

Commodities/Futures magazine launched at the precipice of a revolution in the futures industry—really a revolution in the idea of risk management—that would move it from a small niche industry to ...

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.