Hedge funds are big business on Wall Street. And managing the issues of selling them is becoming a headache for some firms.
Pipe Distributors Inc., a Texas company that buys and sells oil-field pipe, and its profit-sharing and retirement plans this year filed an arbitration claim against Morgan Stanley, saying a broker atthe big Wall Street firm in 2001 invested $2.5 million for it in a hedge fund but failed to disclose the broker received a 25% cut of the fund’s profit. The fund ran into trouble and PipeDistributors, a longtime Morgan Stanley client, had a loss of about $725,000. The case is pending.
Although the firm was a client of Morgan Stanley, the brokerage house has distanced itself from the case, saying the broker didn’t tell the firm he had made the investment in the hedge fund.
