Hedge Fund Losers Recoup From Winners?

Discussion in 'Wall St. News' started by Wayne Gibbous, Mar 8, 2007.

  1. Ruling allows investors who lost money in the Bayou collapse, to sue others who got out early. Supposedly because the payouts were possibly "fraudulent!"

    What's next, I can sue another trader if I lose money and he didn't??? :p

    "Legal" system in this country needs work...

    Excerpt from WSJ: http://online.wsj.com/article/SB117227816284418003.html?mod=2_1154_1

    Bayou Holders Can Sue Others
    Who Cashed Out Before Collapse
    February 26, 2007; Page C3

    Investors who lost money in Bayou Management LLC, a failed Connecticut hedge fund, got a boost from a federal bankruptcy judge who ruled Friday that they could sue investors who cashed out before the fund collapsed in 2005.

    The case is being watched closely by investors in other hedge funds. Some $1 trillion is now invested in these lightly regulated funds for institutions and wealthy individuals -- and investors often pull their money out if they see warning signs that a fund may be in danger. If investors are forced to give money back after getting out, it would increase the risks of investing in hedge funds.

    "I call it the 'Hotel California' syndrome for hedge funds," says Timothy Mungovan, an attorney at Nixon, Peabody in Boston who represents clients in five hedge-fund failures in which redemptions by some investors are an issue. "You can check out anytime you like, but you can never leave."


  2. this case should be thrown out