Friday, 24 October 2014
Last updated 17 hours ago
Sep 23 2011 | 12:40pm ET
A hedge fund is suing over its investment in Sino-Forest Corp.—and it isn't Paulson & Co.
Hong Kong-based Oasis Management wants C$9.5 million from Morgan Stanley, which it said failed to settle put options on Sino-Forest shares that Oasis bought three weeks before a short-selling hedge fund's scathing report on the company sent Sino-Forest shares plummeting. Morgan Stanley claims it terminated the options because trading in Sino-Forest shares was suspended, but Oasis alleges that the bank did so to "limit its liability."
Sino-Forest shares fell more than 70% in June after the Muddy Waters report alleged that the company overstated its timberland holdings. That swoon cost several hedge funds dearly, notably Paulson, which lost more than US$500 million on its huge stake in Sino-Forest.
According to Oasis, it bought options to sell Sino-Forest shares for C$19 million on May 12. On June 2, Muddy Waters published its report, sending shares down to C$5.22 over a two-day period; they have not recovered.
Oasis said that Morgan Stanley offered it C$3.8 million to cancel the options, which the hedge fund paid the bank a C$770,000 premium for. Oasis, which filed the lawsuit in London in July, wants C$7.5 million to settle.
Sep 22 2014 | 4:15pm ET
"I tell people that everybody likes good news and so if you have good performance that’s wonderful,” explains Mike McKitish of Peddie School's endowment, “but it’s the people that want to talk about the bad news or where they drifted and how they came back and how they stayed to their discipline…” that he wants to hear from. Read more…
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