When Gradient Capital Partners co-founder Ivor Farman gave his estranged partner $3.9 million to cover a tax bill, he hoped it would pave the way to a reconciliation. It didn't, but a gift is a gift, a judge has ruled.
Farman cannot have the money he gave Scott Pagel in 2009 back, a London court has ruled. Far from making the gift out of the goodness of his heart, Farman did so "recognizing that his trading has fallen short of his own very high standards and caused very large losses to his partner as well as himself," Judge David Mackie ruled.
Gradient lost 34% in 2008, leading investors to pull some US$900 million from the hedge fund. Pagel blamed Farman for the losses and eventually sued Farman over a loan and over Farman's own redemptions from Gradient. Pagel dropped those claims before the start of the trial on Farman's counterclaim.
Farman resigned from Gradient on the same day he agreed to give Pagel the money. He told the judge the gift had been a mistake, and that his effort to reconcile with Pagel "disintegrated almost as soon as it had begun."