Monday, 28 July 2014
Last updated 5 hours ago
Nov 1 2011 | 9:58am ET
A federal appeals court in Manhattan has likely put an end to one hedge fund's four-year fight with Wells Fargo & Co. over a credit default swap.
The Second Circuit Court of Appeals overturned a lower-court ruling that could have subjected Wells Fargo, which inherited the case when it acquired Wachovia Corp., to a Financial Industry Regulatory Authority arbitration hearing. The appeals court ruled that Vanquish Capital Group had no right to such a hearing.
The negative result is the second in a month for VCG: Its Special Opportunities Fund was ordered to pay more than $2 million to Wells Fargo earlier in October, the result of the bank's countersuit against the hedge fund.
VCG had claimed that Wachovia demanded higher-than-normal margin payments on a 2007 CDS—what began as $750,000 in collateral for a $10 million swap on a collateralized debt obligation rose to more than $10 million—more than one-sixth of the hedge fund's total assets—within several months. VCG sued Wachovia when it demanded a final $550,000 payment that would have pushed VCG's collateral in excess of the face value of the swap.
VCG also lost a similar lawsuit against Citigroup.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…