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

Whisky Business: The Ultimate Liquid Alternative Investment

Sep 15 2014 | 7:02am ET

David Robertson knows his single-malt whisky—he was the Master Distiller at the...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

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

In search of the ‘new normal’ at the Fed

The Federal Reserve keeps baby-stepping toward a “normalization” of monetary policy. But just what is normal?

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.