Saturday, 1 November 2014
Last updated 17 hours ago
Apr 3 2013 | 11:55am ET
A federal judge has dismissed a lawsuit accusing Paulson & Co. of due-diligence failures in its investment in a Chinese timber company, one that cost the hedge fund's investors almost $600 million.
U.S. District Court Judge Marcia Cooke in Miami threw out the would-be class-action, ruling that the plaintiff lacked standing because his investment with Paulson was through a Citigroup feeder fund, meaning Paulson had no fiduciary duty towards him. The judge said a complete, written order would follow, but dismissed the case "without leave to amend."
The plaintiff, Hugh Culverhouse, a former federal prosecutor and the son of the former owner of the National Football League's Tampa Bay Buccaneers, accused Paulson of "gross negligence" and "shocking disregard for the financial well-being of its investors" in buying up 12.5% of Sino-Forest Corp. That company's shares plummeted in 2011 when another hedge fund accused it of overstating its timberland holdings in China.
Paulson told investors that it booked a C$105 million loss over the life of its Sino-Forest investment.
"We are pleased with the judge's ruling," Paulson spokeswoman Dawn Dover said. "We have stated from the outset that this suit was completely without merit and that there was no basis in law or fact for the action."
Culverhouse told The Wall Street Journal that it was not fair that he was barred from suing Paulson simply because he hadn't invested with the firm directly.
Sep 22 2014 | 4:15pm ET
"I tell people that everybody likes good news and so if you have good performance that’s wonderful,” explains Mike McKitish of Peddie School's endowment, “but it’s the people that want to talk about the bad news or where they drifted and how they came back and how they stayed to their discipline…” that he wants to hear from. Read more…
Traders form habits quickly. Understanding these and their effects can better equip us to decipher actual market moves.