Attorneys from Houston’s Ahmad, Zavitsanos & Anaipakos have helped a hedge fund investor earn a ruling at the Delaware Supreme Court that will allow investors in failed hedge funds to investigate their losses as a group while coordinating potential legal actions.
The law firm represents Brown Investment Management, a limited partner that lost every penny of an investment with Texas-based Parkcentral Global in less than 90 days.
Parkcentral Global is now a liquidated hedge fund run by affiliates of billionaire and former presidential candidate H. Ross Perot. Court documents show Parkcentral Global’s loses at approximately USD2.6bn.
Brown Investment sued Parkcentral Global after the company refused to release a list of its investors based on the argument that the list was protected by federal law. However, in the ruling handed down last week, Delaware’s highest civil court ruled that fellow investors have the right to know each other’s identities.
"Hedge funds exploded in the last decade because pooled investments provide a largely unregulated way for hedge fund managers to make money for themselves. This ruling helps those who lost money in poorly-managed funds to find other investors and join together to take legal action," says attorney Amir H. Alavi, with Ahmad, Zavitsanos & Anaipakos who tried the case for Brown Investment. "Hedge funds where managers lacked diligence and proper risk analysis can no longer use divide-and-conquer tactics to avoid responsibility for losses."
Alavi says Brown Investment has not participated in the class action lawsuit filed in the US District Court for the Northern District of Texas against Parkcentral Global, but is investigating the hedge fund’s auditors and other third parties.