Investor Lawsuit Against Highland Tossed

May 29 2013 | 11:21am ET

Highland Capital Management has won the dismissal of an investor lawsuit alleging it misled clients about a hedge fund that imploded during the credit crisis.

A Texas state judge in Dallas agreed with Highland that the plaintiffs had no evidence to present at trial, which was to begin yesterday. "Having reviewed the evidence submitted by the parties and after conducting a hearing on the matter, the court is of the opinion that defendants' motion should be granted," Judge Dale Tillery wrote.

The plaintiffs alleged that Highland misled investors about the prospects for its Highland Credit Strategies, which imploded amidst the credit crisis when Barclays Capital canceled its credit line and seized assets. The investors argued that Highland fraudulently covered up the fact that it was facing $471 million in redemptions that it couldn't cover. A lawyer for the group, Geoffrey Jarvis, said an adviser to the investors had asked about redemptions, and had been told they were "fairly light." In fact, investors had moved to pull 42% of the fund's assets.

The investors argued that they relied on Highland's assurance in the spring of 2008 when deciding to stay in the fund.

At last month's hearing, however, Highland lawyer Michael Aigen argued that "a vague statement that the outlook of the fund is good isn't the same as if Highland said the redemption rate was X when it was actually Y."


In Depth

Why Ponzi Schemes Work: An In-Depth Look At The Allen Stanford Fraud

Dec 21 2014 | 10:30am ET

Texan Allen Stanford first appeared on the radars of financial regulators in 1997...

Lifestyle

Cooper-Hohn Won't Contest Divorce Settlement

Dec 18 2014 | 9:51am ET

The ex-wife of hedge fund billionaire Christopher Hohn will not contest a divorce...

Guest Contributor

Alternative Investment Funds Face A Communications Imperative

Dec 19 2014 | 6:10am ET

A handful of the top alternative investment firms on both sides of the Atlantic...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

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.

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.