The ruling by Justice Karla Moskowitz will put approximately $240 million back in the hands of the investors, who saw losses of about 40% of the hedge fund’s value as the fund collapsed under the weight of its heavy telecommunication and energy holdings. Following its collapse, the fund was liquidated, where it was discovered the sparsely traded securities in the portfolios had been mispriced; leading the firm to miscalculate the value of the fund by more than $300 million.
Further, the mispricing issue led to a protracted court battle, as the two sides argued over the best way to treat two separate sets of liquidated figures. One set involved performance data as it was originally calculated, with the other relating to returns after the alleged mispricing came to light.
Judge Moskowitz said the assets being returned should be calculated based on the lower of the two sets of figures and then 75% of that should be returned to investors. She also added the distribution was on an “interim” basis and the amounts can be adjusted later if necessary.
“We’re pleased that the court has ordered a distribution,” said Dennis Block, a lawyer representing Lipper, adding Lipper has been trying for months to get the money returned to the fund’s investors.
Kenneth Lipper & Co is unrelated tofund research company Lipper Inc.