Hedge Fund Settles Libel Case For ‘Substantial’ Sum

Feb 11 2009 | 2:41am ET

A defunct hedge and its executives have settled a libel case against a British newspaper.

Pentagon Capital Management, founder David Chester, CEO Lewis Chester and managing director Jafar Omid were paid a “substantial” undisclosed sum along with legal costs by the Sunday Express, lawyers announced at a London hearing yesterday. The fund and its leadership filed the libel suit after the tabloid published allegations that the managers planned to keep £1 billion (US$1.5 billion) and that it had a history of exploiting small investors.

“The trust is that there is no basis for these allegations,” David Price, Pentagon’s lawyer, said at the hearing. “In fact, information has been provided on a regular basis to investors and very substantial sums have already been returned to them since the decision was made in May 2008 to wind down the funds in Pentagon.”

Pentagon announced plans to close its doors in March, after the Securities and Exchange Commission accused it of mutual-fund market-timing.

The Express, for its part, acknowledged its alleged errors, including a failure to disclose that the tabloids owner was a Pentagon investor.

Richard Desmond “accepts that it was his comments in the presence of Sunday Express journalists that prompted the Sunday Express to write the article,” Price said.

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