Message 24327132
HedgeCo.Net (West Palm Beach) - Ritchie Capital Management may be forced to deliver a lot more than an apology, if investors have their way.
The company, who operates four hedge funds, is fighting an involuntary bankruptcy brought on by investors who not only are trying to reclaim their cash, but expose some secrets in the process.
Investors are looking to shed light on the reasoning behind the fund’s demise.
This would entail opening up the record books, along with investor stategies, trading secrets, and other information that is usally kept hush hush by hedge funds.
Investors are hoping to prove that Ritchie put their own needs ahead of their clients.
Ritchie’s attorneys jumped to the defense, claiming that the investors knew of the risks involved in the hedge fund, and shouldn’t be using bankruptcy as an excuse to poke their heads in places where they shouldn’t be.
“The fact that somebody wants information is not a reason for the entity to be in bankruptcy,” said Ronald Barliant, one of Ritchie’s lawyers. “In my view, it’s not an appropriate strategy for anyone to pursue if what they want is information.”
Investors are demanding balance sheets for every entity Ritchie owned in April 2007, when they allegedly sold most of the fund’s assets for $285 million.
So far, 2008 hasn’t been the best year for Ritchie. In January, three investors tried to recoup $45 million from their Multi-Strategy fund by forcing another involuntary bankruptcy.
The true fear lies in the fact that if Ritchie is forced to reveal its internal operations, then regulation by lawsuits may have no end in sight. Hedge Funds enjoy the freedom of loose guidelines and ambiguity, and aren’t about to give that up without a fight.
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