Split Decision In Highland Feud

Feb 10 2014 | 10:33am ET

One of the more bitter battles in hedge-fund history has come to an end, with both sides battered and neither looking much like a winner.

On paper, at least, Highland Capital Management appears to have gotten the better of a Dallas jury's split decision: The firm's former private-equity chief, Patrick Daugherty, was ordered to pay the hedge fund $2.8 million, while Highland was ordered to pay him only $2.6 million, and in spite of the jury's finding that Highland defamed Daugherty, it refused to award him any damages on that count. Certainly, Highland sounded more upbeat about the decision than did Daugherty.

"The verdict is further proof that Pat Daugherty lied extensively and the facts only got in the way of his stories," Highland founder James Dondero said. "Highland never wanted this litigation but was forced to act when Mr. Daugherty refused repeated requests that he comply with his employment agreement."

For his part, Daugherty said he was "disappointed" by the ruling, and questioned how the jury could "find I was defamed and there were no damages."

Highland sued Daugherty in 2012, a year after he left the firm, accusing him of defaming it and of refusing to return proprietary documents. Daugherty shot back with a countersuit, alleging that the hedge fund had defamed him and was withholding his bonuses.

The $2.6 million the jury awarded Daugherty covered his compensation claim. Highland was awarded $2.8 million to cover its legal fees.

Dondero will be back in a Texas courtroom in June as his divorce case winds on. Highland's lawsuit against Daugherty came two weeks after the former executive testified in that trial on Dondero's wife's behalf.


In Depth

Will Liquid Alts’ Performance Sustain Future Asset Flows?

Aug 25 2014 | 10:34am ET

Liquid alternative investment funds saw the highest percentage of capital inflows...

Lifestyle

Och Funds Women In Finance Initiative At U-M

Aug 28 2014 | 3:01pm ET

Och-Ziff Capital founder Daniel Och and his wife have made a "generous donation"...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

The time was right

Commodities/Futures magazine launched at the precipice of a revolution in the futures industry—really a revolution in the idea of risk management—that would move it from a small niche industry to ...

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.