Barred Hedgies’ Lawsuit Against Lawyers Moves Forward

Sep 28 2007 | 12:50pm ET

A judge has streamlined a $4.4 billion lawsuit filed by a defunct hedge fund against its legal counsel, but has allowed it to go forward.

New York Supreme Court Justice Bernard Fried dismissed five of 11 claims against Akin Gump Strauss Hauer & Feld filed by the principals of the Veras series of funds, but gave the go-ahead to a fraud claim.

James McBride and Kevin Larson of Veras accused Akin Gump of advising that late-trading mutual funds was legal. Unfortunately for McBride and Larson, then-New York Attorney General Eliot Spitzer disagreed: Veras Investment Partners, which once managed $1 billion, wound up paying $36 million in penalties and went out of business. McBride and Larson were each hit with a $750,000 fine, and were barred from the securities industry.

The fraud claim against Akin Gump alleges the firm concealed conflicts of interest.

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