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To: long-gone who wrote (47320)	1/20/2000 2:35:00 PM
From: lorne	Read Replies (1) \| Respond to of 116764

OT. And this one--- US hedge fund sues Societe Generale, Credit Lyonnais A US hedge fund going into liquidation is sueing two large French banks, Credit Lyonnais and Societe Generale, blaming them for pushing it into ruin by not honouring contracts on financial derivatives, the Wall Street Journal Europe reported on Thursday. The High Risk Opportunities fund, run by Florida-based III Offshore Advisors, alleged that the French banks did not "honor derivatives contracts intended to hedge against the decline in the value of the ruble against the dollar", the report said. The lawsuit had been filed in the New York state court with a claim for one billion dollars (988.1 million euros) in damages, the report said. Societe Generale's North and South America general counsel, William Bowden, was quoted in the report as saying that the case was a "contract dispute" and that "we believe our interpretation is correct". He said: "We believe that the events in Russia relieved us of our obligations under the contract." A Credit Lyonnais spokeswoman declined to comment, it said. The fund had used borrowed money to invest in ruble denominated bonds, known as GKOs, with a face value of 850 million dollars. The claim is based on a strategy by the fund calculating that the GKOs would fall but that derivative contracts taken out with banks would rise in value in response, more than compensating for losses on the bonds and therefore yielding profits. When the Russian government unexpectedly called a halt to foreign debt payments in August 1998, the fund's lenders called for more collateral on their margin loans, the report said. But the fund had hedged against a fall in Russian bond prices by buying into currency forward contracts with the French banks and other banks, the report said. The fund had expected the derivative contracts to make money as the bonds fell in value, in line with a decline in the ruble. Russia's debt default sparked a collapse in the ruble and GKO bonds. When the fund called on the French banks to make margin payments under the derivative contracts, the banks refused, the report said. The fund had other currency forward contracts with Deutsche Bank, ING Bank and Morgan Stanley but was not sueing them, it said. Creditors of the fund which made margin loans to buy Russian bonds include major investment banks Citigroup, Lehman Brothers Holdings, Credit Suisse Group and Merril Lynch, it said. voila.co.uk