One Hedge Fund Sues Another For Slander

May 6 2008 | 9:24am ET

Kansas hedge fund Jayhawk Capital Management is going to court to preserve its good name.

Sued last year by San Francisco hedge fund shop Primarius Capital for allegedly orchestrating a pump-and-dump scheme to Primarius’ detriment, Jayhawk has countersued for slander in Kansas City, Kan., federal court.

At issue is a press release issued by Primarius’ law firm, headlined “Billion Dollar Jayhawk Hedge Funds and Jayhawk Capital Management Sued for Conspiracy, Fraud, Fagelbaum & Heller Announces.” Jayhawk and its principal, Kent McCarthy, maintain the release was defamatory and contributed to millions in losses for the Prairie Village, Kan.-based firm, including BlackRock’s decision to redeem $15 million from one of its funds.

In the release, Primarius lawyer Phillip Heller implied that Jayhawk was among “a handful of predatory, unethical managers and advisers who think of themselves as above the law” and accused Jayhawk of orchestrating a cover-up.

At the time, a stunned McCarthy told FINalternatives, “I’ve never dealt with a lawyer who conducts himself this way.”

McCarthy and Jayhawk dismiss Primarius’ claims, saying it wanted to withdraw its $20 million investment in part due to Primarius’ poor performance. The slander suit calls Primarius’ lawsuit “a veiled attempt to shift the blame for its poor performance and other failings.”

Primarius’ statements, including the Heller press release, “were willfully and maliciously aimed at conveying the false message that Jayhawk and McCarthy’s business practices are unethical and illegal.” Jayhawk is seeking unspecified damages for defamation, wrongful interference with contract and wrongful interference with business relationships.

Heller, for his part, called Jayhawk’s countersuit “more of the same nonsense.”

“I don’t think they’ll have any more success in federal court than they had in state court,” Heller told the Kansas City Star, referring to a Kansas state court’s dismissal of a similar action earlier this year for lack of personal jurisdiction.

RELATED STORIES

Battling Hedge Funds Fling Accusations


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

Hedgie Funds US Squash Program

Dec 24 2014 | 8:46am ET

Squash, anyone?

Guest Contributor

EidoSearch’s Top Three Market Projections For 2015

Dec 23 2014 | 4:03am ET

It is that time of year again when prognosticators make their big market calls for...

 

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.