WEST PALM BEACH, FL (HEDGECO.NET) – Lawyers have warned hedge fund investors to use caution in choosing which hedge fund managers to invest with. The warning resulted from the potential problemswhich could arise when former hedge fund partners suddenly decides to split. Recently, a federal judge ordered Catequil Asset Management Company to liquidate its operations, and return about $1.5billion of investor money back to its owners.
The court order resulted in the ongoing feud between the two partners of the fund, Robert Ellis and Paul Touradji. Part of the problem concerns the missing $1 million from the firm, such matter eventually landed in court. Investors in these strategies will ultimately be the victims of such nasty fight.
While the judge ordered Catequil to return investor�s assets, this process may take up to three months for some investors to get their money back. Such breakups could be very tough for hedge fund investors according to lawyers working for hedge fund management firms.
Eliot Raffkind, a partner at law firm Akin Gump in Dallas warns that “These sorts of hedge fund industry break-ups can be just like a divorce because people are thinking emotionally, not rationally.� No one knows the exact numbers of hedge funds that break up each year, but attorneys think many hedge fund partnerships break up for many other reasons. Raffkind also said “We want people to get something in writing, and investors as well as hedge fund managers should strive to form hedge funds where the loss of a manager won’t be as catastrophic.”
Another hedge fund lawyer Jedd Wider, a partner at law firm Orrick, Herrington & Sutcliffe said, “These break-ups are extremely detrimental, especially if they happen during a lockup period where investors are forced to stay put even when a key person leaves the fund.�
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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