Monday, 29 December 2014
Last updated 6 min ago
Mar 22 2012 | 12:25pm ET
A fund of hedge funds and one of its underlying manager have unleashed a wave of litigation against one another.
First, in December, Fintan Partners filed a redemption request, seeking its $45 million back from Medley Capital, which manages $1.4 billion. The fund of funds followed that with a lawsuit, accusing Medley and two of its three remaining founders of stripping the hedge fund to raise permanent capital—and a permanent source of fee income.
At issue in the February lawsuit is Medley's decision to transfer six of its income-producing assets—accounting for about 10% of its assets under management—to a holding company, Medley Capital Corp., and then taking that company public, raising $100 million.
Medley investors, of course, received shares of that company, at $14.75 a piece, $2.75 more than its initial public offering price. The shares are now trading for $11.30.
Fintan eventually withdrew the lawsuit filed last month, which complained that Medley has sold none of the shares allocated to the hedge fund and that further share sales would further drive down the share price.
Medley countered with a lawsuit in the Cayman Islands, asking the court to declare a 2007 side-letter between the two sides giving Fintan the right to redeem (and be paid in cash) nullified. According to Medley, the deal was rendered moot when Medley restructured.
Now, Fintan is back in court, accusing Medley of breach of contract over—you guessed it—the side-letter. Neither side is commenting, other than via litigation.
Dec 1 2014 | 10:21am ET
As 2014 winds down, Northern Trust Hedge Fund Services executives took some time to share their outlook on trends facing the industry in 2015. Read more…
Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.