Hedge Fund Disputes
Rich, Intelisano & Katz represents retail and institutional investors worldwide in hedge fund disputes in arbitration and litigation against financial firms. Our clients have included ultra high net worth and high net worth individuals, family offices, hedge funds, funds of funds, endowments, non-profits and other institutions in claims against brokerage firms, investment and private banks, investment advisors, hedge funds and other financial companies. Partners John Rich and Ross Intelisano won the second largest hedge fund-related customer arbitration award ever rendered against a Wall Street firm. The Firm’s attorneys were pioneers in the hedge fund fraud area.
The Firm represents limited partners of hedge funds in disputes with general partners related to fraud, side pockets, gates, valuations, and breaches of provisions of offering documents.
Highlights of our partners’ past hedge fund case victories include Bayou v. Goldman Sachs Execution & Clearing: a $20.6 million FINRA arbitration award rendered in June 2010 against Goldman Sachs related to the Bayou hedge fund fraud. The 18-day hearing generated a 100% recovery of compensatory damages requested. It is the largest arbitration award ever rendered against Goldman, the second largest hedge fund-related customer arbitration award, and the ninth largest customer arbitration award of any kind against any Wall Street firm. The award is also the first win in any court or arbitration forum by investors against a clearing or prime broker related to a hedge fund Ponzi scheme based upon fraudulent transfer theories. The award was confirmed by Judge Rakoff of the SDNY in November 2010 and is currently on appeal to the Second Circuit.
In December 2009, we won a $3.4 million arbitration award against Bear Stearns related to the High Grade Structured Credit Strategies hedge funds which blew up in July 2007. It is the first and only reported victory by any High Grade investor and the award was rendered after the criminal acquittals of portfolio managers Ralph Cioffi and Matthew Tannin.
The Firm presently represents a family office in a $383 million FINRA arbitration claim in New York against Citigroup Global Markets Inc. related to Citigroup’s misconduct with respect to the structuring, monitoring and handling of hedge fund and private equity portfolios, and the improper recommendation and implementation of a leveraged option swap transaction and a lender protected unit trust.
The Firm handled a $15 million dispute on behalf of a fuel and heating oil company against an international broker dealer related to the purchase of OTC derivatives, including swaps and options, pursuant to an ISDA agreement.
Mr. Rich and Mr. Intelisano pioneered the practice of representing individuals and institutions in group arbitrations related to hedge fund fraud. In 2011, we represented 13 investors from around the world who had lost over $40 million in a group arbitration related to the Bear Stearns High Grade Funds. We successfully represented numerous investors in group claims against investment advisors and banks for failing to do proper due diligence in their recommendation of Bernard Madoff-related feeder funds. Mr. Rich and Mr. Intelisano represented investors who lost over $25 million in the $250 million Bayou hedge fund Ponzi scheme run by convicted fraudster Sam Israel and resolved a multi-million dollar group arbitration against an advisor for failing to do proper due diligence on Bayou.