Collapsed Hedge Fund Loses MBS Arbitration Appeal

May 16 2014 | 10:56am ET

A defunct hedge fund has to seek its money back from the firm that sold it mortgage-backed securities, rather than the bank that issued them, a federal appeals court ruled.

The U.S. Second Circuit Court of Appeals yesterday upheld an injunction against Turnberry Capital Management barring it from bringing a $13 million claim against SunTrust Banks before a Financial Industry Regulatory Authority arbitration panel. The appellate judges agreed with the lower court that Turnberry was not a customer of SunTrust, but of Raymond James Financial, which sold the MBS.

A lawyer for Turnberry, which closed its doors in 2008, said it was "disappointed" by the ruling but that it would pursue arbitration against Raymond James.

Last year, U.S. District Judge Naomi Reice Buchwald ruled that Turnberry could arbitrate only with firms from which it directly received goods or services.


In Depth

Debunking Conventional Investment Wisdom

Feb 8 2017 | 3:22pm ET

Due diligence in the hedge fund world has long involved some combination of the...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

iCapital Network: The Trump Effect On Direct Lending

Feb 23 2017 | 4:21pm ET

The arrival of the Trump Administration has raised questions among private debt...

 

From the current issue of