The defendants prevailed on summary judgment on all counts in this case concerning a hedge fund’s failure.
Retained by Paul, Weiss, Rifkind, Wharton & Garrison
Following the failure of their investment in a hedge fund managed by Fletcher Asset Management, plaintiffs brought a $220 million suit against Citco, the fund’s administrator. Defense counsel retained Cornerstone Research and Shane Johnson of Texas A&M University to opine on loss causation and damages.
Professor Johnson’s analysis showed that the plaintiffs’ expert’s calculation substantially overstated damages, due to a misinterpretation of the structure of the plaintiffs’ investment.
Plaintiffs alleged that certain misrepresentations, omissions, and conflicts of interest of the administrator defendants caused their losses. Professor Johnson analyzed these factors and assessed whether any of the plaintiffs’ losses were attributable to the allegations.
Professor Johnson demonstrated that the plaintiffs’ expert had failed to establish a causal relationship between the alleged misrepresentations, omissions, and conflicts of interest and the plaintiffs’ losses. In particular, his analysis showed that the plaintiffs’ expert ignored the impact of several factors on the fund, including that of the financial crisis.
He also showed that the plaintiffs’ expert did not consider the impact of the actions of other parties, including the investment manager, or the plaintiffs’ own investment decisions. Finally, Professor Johnson explained that the expert’s calculation substantially overstated damages, due to a misinterpretation of the structure of the investment as a “guaranteed” investment.
Shortly before trial, our clients prevailed on summary judgment on all counts.