New York (HedgeCo.Net) – The Supreme Court has decided to review whether or not it is legal for predatory hedge funds to target assets outside of US jurisdiction, Jubilee USA Network reports.
“This is good news for countries around the world. The Supreme Court’s action could make it less profitable for hedge funds to engage in predatory behavior,” Eric LeCompte, Executive Director of the religious antipoverty campaign, Jubilee USA, said. “In a few months, the Supreme Court will consider a more important appeal related to this case that will impact the world’s poorest countries.”
The Supreme Court will review a lower court’s order for banks to give information on Argentine assets, including those assets held outside of US jurisdiction, to a group of hedge funds seeking to collect from Argentina’s 2001 default.
Argentina is expected to appeal to the US Supreme Court by mid-February in response to a US 2nd Circuit Court ruling ordering the country to pay $1.33 billion to predatory hedge funds. The precedent the case sets will hurt poor countries in financial distress and could allow a small group of hedge funds to target assets that benefit vulnerable populations. oin the IMF, World Bank and White House in denouncing this extreme hedge fund behavior that takes advantage of the world’s poorest people.”
These cases go back to 2001, when Argentina defaulted on roughly $81 billion in debt. Multiple hedge funds purchased debt for pennies on the dollar. These hedge funds are called “vulture” funds because they prey on countries in financial distress and target assets that benefit poor populations. The nearly 93% of bondholders who restructured their debts with Argentina have seen the value of their bonds increase. The holdout hedge funds that are suing Argentina refused the deal several times and have instead sued for the full amount of the debt they purchased.
The opposition to vulture funds is widespread. Similar hedge fund claims against Argentina have been rejected by courts in Germany, and France filed an amicus brief in support of Argentina in a previous appeal to the Supreme Court.
“It’s rare that we see such a global consensus rejecting this predatory hedge fund behavior. These hedge funds hurt legitimate investors and poor people,” noted LeCompte.
Jubilee USA has won critical global financial reforms and more than $130 billion in debt relief to benefit the world’s poorest people.
Alex Akesson
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