New York (HedgeCo.Net) – Service providers for hedge funds scored a victory yesterday when a New York judge threw out a suit filed against UBS by defrauded investors.
Judge Charles Ramos dismissed the complaint in a Manhattan court at the request of UBS, who served as prime broker and custodian to the now collapsed hedge fund Wood River Partners, LP.
The investors had accused UBS of improperly profiting from the trades of the fund, and claimed that UBS had made $100 million by selling borrowed shares of Endwave Corp., the fund’s main holding.
The plaintiffs also accused UBS of creating a short market for Endwave stock while borrowing from the hedge fund’s account to buy shares. This in turn decreased the fund’s portfolio by almost $20 million, according to their allegations.
"The facts alleged do not support the causes of action,” Ramos stated. "These plaintiffs lack standing."
Investors were duped into thinking their assets were being diversified when in reality they weren’t. The hedge fund exceeded the 10% cap on ownership of any one company, though it wasn’t clear whether or not UBS had knowledge of that situation.
Nevertheless, it was a victory for service providers seeing as how recent trends show more and more of disdained investors going after affiliated or hired help by defunct hedge funds.
Investors in Wood River lost approximately $100 million. The plaintiffs of the lawsuit were made up of a group that had funneled in $79 million. John Whittier, who headed the hedge fund, is now serving three years behind bars.
Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
