Hedge Fund Exec. Loses Arbitration Fight With Investor

Oct 4 2011 | 3:05am ET

A Miami hedge fund is throwing in the towel after an arbitration panel found that it made misleading statements to a fund of hedge funds.

Quantek Asset Management said its founder, Javier Guerra, has resigned as manager of its Quantek Opportunity Fund. The once-$1 billion is in liquidation—a process that will now have to be completed by another firm.

Guerra's exit follows Quantek's defeat at the arbitration table by Aris Capital's Multi-Strategy Fund. The arbitrators found that Guerra and Quantek had fraudulently induced Aris to invest with it by making false and misleading statements. The panel awarded Aris about $1 million in damages.

Quantek and Guerra said they "strongly disagree with the arbitration panel's findings and unequivocally assert that they never made any false or misleading statements to Aris or any other investor in the funds." But, they told clients in a letter last week, "as a result of the finding," the directors of the fund decided to end "Guerra's continued service as a director of the fund."

The panel "ignored critical evidence which clearly undermined the truth of Aris' claims," Guerra told Forbes. "At no time did I mislead Aris. The fact is Aris has exploited an administrative error by an operations executive to recover $1 million from a one-time $1 billion fund."

Aris, headed by Jason Papastavrou, has been fighting Quantek since the latter froze redemptions in 2008. The following year, Aris sued Quantek, accusing Guerra of using its fund as a "personal 'piggy bank,'" another allegation Guerra denies.

Meanwhile, the Quantek fund's board hopes to name one of its biggest investors, Weston Capital Asset Management, as the fund's interim manager. The fund has already returned about $260 million to investors.


In Depth

Q&A: Decathlon Capital On Revenue-Based Alternative Lending

Oct 30 2017 | 3:49pm ET

The explosion in private credit activity since the end of the financial crisis is...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Saxby: Not All EBITDA Is Created Equal

Nov 30 2017 | 8:02pm ET

Record levels of dry powder are driving competition among private equity firms to...