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Failed Hedge Fund Sues London AdministratorArcheus Capital, a $3 billion (£1.5 billion) US investment group that became one of last years biggest hedge fund casualties, is suing its London-based administrator, blaming it for the fund’s collapse. The fund, founded by a group of former Salomon Brothers bond traders, is claiming at least $465 million in damages from GlobeOp Financial Services, a UK hedge fund administration services group set up by a former executive of Long Term Capital Management, another collapsed hedge fund. Archeus, whose assets shrank from about $3 billion in May 2005 to only $700 million by the following October, claims that GlobeOp’s “reckless indifference” in carrying out its role as fund administrator pushed Archeus into a “death spiral from which they could never recover”. Fund administrators such as GlobeOp, which is preparing for an initial public offering on the London Stock Exchange, keep daily trading records for hedge funds, calculate asset values and provide other services such as compiling tax returns. &&&§ionName=BusinessLaw,mywindow,menubar=0,resizable=0,width=615,height=655); The next big thing in litigation: hedge fund disputesWith so much money pouring into hedge funds, something is bound to go wrong. That, at least, is what litigators are hoping Related Links Sub-prime mess tip of iceberg? Twenty reasons to be cheerful Amaranth trader returns to marketArcheus alleges that GlobeOp staff made a series of accounting errors that led the fund to trade off incorrect information. GlobeOp, run by former LTCM executive Hans Hufschmid, said in a statement that it rejected Archeus’s claims, adding that it “intends to vigorously assert a strong defence as well as counterclaims”. GlobeOp was not immediately available to give further details of its proposed defence but it is understood that the fund will claim any errors or omissions on its part where a consequence of incomplete and inaccurate information provided by Archeus management. GlobeOp added that it believed the timing of Archeus’s lawsuit was “calculated to gain maximum leverage against GlobeOp during its IPO”. GlobeOp, which has 1,600 staff in the UK, US, India and Cayman Islands, said on June 15 that it planned to raise £52 million in an IPO. Archeus told investors last October that it was winding down, blaming GlobeOp for its failure. Archeus was not immediately available for comment. The collapse of Archeus was the second-biggest hedge fund closure of 2006, according to the industry journal Absolute Return. Of the 83 hedge funds that folded last year, Amaranth Advisers, the $9.1 billion fund caught out by sharp swings in natural gas prices, was the largest. Tag CloudExternal InformationAdditional InformationHouse Approves Creation of a Federal Disaster Insurance Program...Sports Fans, Always in Touch... Digital shines through ITV’s fuzzy picture... McClatchy Will Take 3rd-Quarter Charge... Where Am I?News Main Page - Business - Failed Hedge Fund Sues London Administrator |
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