October 15, 2009 – Crosby & Higgins LLP Resolves Compensatory and Punitive Damages Claims Arising Out of Collapse of Sub-Prime Backed Hedge Funds
October 15, 2009
After a protracted dispute, Crosby & Higgins LLP has resolved claims on behalf of its client in an action brought in the Commercial Division of New York State Supreme Court. The suit, which alleged claims for breach of contract, breach of fiduciary duty, negligent misrepresentations, fraud, unjust enrichment, and breach of the covenant of good faith and fair dealing, sought to recover at least $25 million dollars in compensatory and punitive damages arising out of the collapse of two hedge funds heavily invested in collateralized debt obligations backed by mortgage securities. The client was among numerous individual and institutional investors that lost their entire investment when the funds’ investments collapsed, erasing more than $2 billion in assets. Crosby & Higgins LLP earlier filed an appeal in the case seeking reversal of an order compelling arbitration of the claims before the Financial Industry Regulation Authority (FINRA). The case was resolved on a confidential basis and the claims dismissed with prejudice before the jury in a related federal prosecution acquitted the individual hedge fund managers responsible for running the funds of criminal charges for securities, wire, and mail fraud.