Pensions Win Hedge Fund Liquidation Fight

Apr 20 2012 | 2:21am ET

A trio of Louisiana public pension funds is set to get its money back from Fletcher Asset Management—along with all of the fund's other investors.

A Cayman Islands judge on Wednesday approved the pensions' winding-up petition, ordering the FIA Leveraged Fund liquidated and appointing two Ernst & Young employees as its liquidators. The pensions in January moved to have the fund liquidated after almost a year of negotiations with New York-based Fletcher that followed a July redemption request that was filled by promissory notes.

The judge agreed with the pensions' position that FIA Leveraged was insolvent. The winding-up petition also accused Fletcher of failing to file audited financial statements for three years and having no directors between Nov. 21, 2011, and Jan. 24.

Fletcher said it would consider its options in the wake of the decision.

"We are disappointed in the Grand Court's ruling, which we believe is incorrect," Fletcher said. "The FIA Leveraged Fund is evaluating all of its options at this time, including an appeal. We remain committed to managing all of our funds in the best interests of our investors."

The battle with the three pensions—the Louisiana Firefighters' Retirement System, Louisiana Municipal Employees' Retirement System and the New Orleans Firefighters' Pension and Relief Fund—led to a regulatory investigation of Fletcher. The funds say they invested $100 million with Fletcher four years ago after receiving promises of a guaranteed 12% return—backed by other investors' assets. Fletcher has said that there was no ironclad guarantee.

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