Ex-Compliance Chief Accuses Hedge Fund CEO Of Front-Running

Nov 11 2008 | 9:23am ET

A former hedge fund compliance chief is accusing his old boss of favoring his interests of those of the fund’s investors in a wrongful termination lawsuit.

Joseph Sullivan says he was fired as chief compliance officer at New York-based Peconic Partners after questioning some of CEO William Harnisch’s trading. According to the lawsuit, filed in New York State Supreme Court, Harnisch engaged in front-running of Potash Corp. shares, selling his own stake in the fertilizer company for about $130 per share just days before unloading the fund’s stake for about $40 less per share.

Potash Corp. shares fell be more than half last month and closed yesterday at $81.63.

Sullivan’s lawyer, Alan Sklover, told the New York Post that the Securities and Exchange Commission had been notified of his client’s accusations against Harnisch.

For his part, Harnisch dismissed Sullivan’s claims as those of a “disgruntled employee,” according to the Post. He called the allegations “ridiculous.”

Peconic manages $1.5 billion in assets.

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