HedgeCo.Net

Among the 300 investor comments filed over the past month with the Securities and Exchange Commission about naked short selling, most voiced opposition to the abusive version of it.

Adding to the cry against naked short selling is a new proposal that the SEC is slated to release this week protecting publicly traded companies from abusive naked short selling.

What’s more, South Dakota voters will decide in November whether to approve an initiative that the state’s securities director says would ban all short selling. The group sponsoring that action promises to get similar initiatives on ballots in 18 other states if the SEC doesn’t put more restrictions on short sales.

The hedge fund industry is fighting restrictions on naked short selling, in which securities are sold short without borrowing the stock first. Abusive naked short selling is being blamed for depressing stock prices in financial services stocks as well as stock prices for other companies.

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Tags: 6-million, contract-lawsuit, party-vendors

West Palm Beach (HedgeCo.net) - The Manager of the K Squared Funds, a New York-based group of hedge funds, was named as a defendant in a lawsuit filed by his ex-partner. The suit brings claims for fraud, breach of contract, unjust enrichment, and bad faith dealing in connection with the hedge funds.

Filed in the Commercial Division of New York Supreme Court, New York County, the complaint details how Kane and the hedge funds benefited by false attribution of income to Kane’s ex-partner by profiting from the interest income while saddling the ex-partner with the tax bill, and how Kane failed to comply with his contractual obligations, keeping his ex-partner in the dark about the value of the Funds.

The defendant, Chris Kane of New Canaan, Connecticut, parted ways with his partner in 2006.

Editor for HedgeCo.Net
Email: alex@hedgeco.net

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Tags: bad-faith, boston, chris-kane, complaint-details, contract-lawsuit, contractual-obligations, due-diligence-service, false-attribution, interest-income, monday-morning, nara, new-canaan-connecticut, new-york-county, new-york-supreme-court, new-york-supreme-court-new-york-county, party-vendors, prison-term, supreme-court-new-york-county, unjust-enrichment, west-palm-beach

New York (HedgeCo.Net) - American auto parts maker Delphi has been given the green light to proceed with their suit against hedge fund Appaloosa Management.

U.S. Bankruptcy Judge Robert Drain denied a request by Appaloosa yesterday to dismiss the fraud and breach of contract lawsuit that Delphi had waged against them. Delphi is attempting to collect the $2.55 billion that was originally promised to them by Appaloosa as part of their plan to exit Chapter 11.

While Judge Drain did disregard some of Delphi’s complaints, sources say he rejected the arguments of Appaloosa, including the one that stated the agreement with Delphi only allows for damages of up to $250 million.

The money was part of a bigger, $6.1 billion refinancing strategy that was promised to Delphi through various investors. After $2 billion was granted by former parent company General Motors, Appaloosa got weary of the deal and cited an overdependence on GM. One day before the deadline to walk away, Appaloosa did just that, even though Delphi had attained the rest of the financing needed to solidify the deal.

The lawsuit is scheduled to go to trial next year.

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

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Tags: appaloosa-management-lp, april-29, bankrupty, bastion, brokerages, cayman-net-news, chief-executive, contract-lawsuit, disapproval, due-diligence-service, evidentiary-hearing, harbinger, nara, nasdaq, party-vendors, robert-drain, setback, west-palm-beach