Judge Tosses Hedge Fund Vs. Hedge Fund Slander Claim

Sep 23 2008 | 10:38am ET

A federal judge has dismissed a defamation lawsuit brought against one hedge fund by another over a press release.

U.S. District Judge John Lungstrum of Kansas City, Kan., threw out Jayhawk Capital Management’s claim against Primarius Capital and its managing member, ruling that Primarius does not have enough contacts within Kansas for the courts there to have jurisdiction. Jayhawk needed to show that Primarius and Patrick Lin targeted Kansas with the allegedly defamatory press release, and not simply that the California-based firm has some Kansas-based clients, “or even that some of their Kansas relationships were affected by the allegedly defamatory statements,” the judge found.

Jayhawk sued Primarius earlier this year, after the latter hedge fund had issued a press release headlined “Billon Dollar Jayhawk Hedge Funds and Jayhawk Capital Management Sued For Conspiracy, Fruad, Fagelbaum & Heller Announces.” The release came shortly after a lawsuit filed by Primarius against Jayhawk, accusing the latter of orchestrating a pump-and-dump scheme, was sent to arbitration.

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, Kent McCarthy, Jayhawk’s principal, told FINalternatives, “I’ve never dealt with a lawyer who conducts himself this way.”

Jayhawk said it is still considering whether to file the slander claim in another court.

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