Court Tosses UBS Lawsuit Against Highland

Jul 27 2011 | 11:50am ET

A New York State appeals court has all but ended UBS' legal battle with Highland Capital Management over losses it suffered in a collateralized debt restructuring.

The court dismissed most of the bank's second lawsuit against the hedge fund, ruling that UBS' amended fraud complaints were covered by the dismissal of most its first lawsuit at the beginning of last year. UBS refiled the case last June, accusing Highland of fraudulently inducing it to restructure the CDO in 2008 by providing "false, incomplete and otherwise misleading" information.

But "UBS's claims against Highland in the original action and in this action all arise out of the restructured warehousing transaction. While the claim against Highland in the original action was based on Highland's alleged obligation to indemnify UBS for actions taken by the affiliated funds, and the claims against Highland in the second action arose out of Highland's alleged manipulation of those funds, they form a single factual grouping," the court ruled last week. "Both are related to the same business deal and to the diminution in the value of the securities placed with UBS as a result of that deal."

The appeals court did say that UBS would be permitted to sue Highland for breach of good faith and fraudulent conveyance, but only for "conduct alleged to have occurred after the commencement of the prior action" in early 2009.


In Depth

bfinance: Fees Falling Across Asset Classes, Yet Overall Investor Costs Still Climbing

May 16 2017 | 9:53pm ET

Despite unprecedented attention on fees, new research from investment consultancy...

Lifestyle

Aston Martin Returns To Debt Market As DB11 Drives Turnaround

Mar 31 2017 | 5:21pm ET

James Bond’s preferred carmaker is returning to the public debt markets for the...

Guest Contributor

Risk-Based Compliance: Why Oversight Of Outsourcing Is Critical

May 10 2017 | 7:02pm ET

Compliance is notoriously one of the trickiest middle office functions for funds...

 

From the current issue of