Lawyers representing two sets of Amaranth investors have said they may not sue the failed hedge fund, Investment Dealers’ Digest writer Dan Freed reports.
Scott Berman, an attorney with Friedman Kaplan Seiler & Adelman who represents investors in Amaranth, sees a possibility that no one will sue the hedge fund over its loss of more than $6 billion in about a week in September. (The fund took the hit after it lost a massive trading gamble on natural gas prices.)
"If we found there was fraud or that they deviated dramatically from what they promised in the offering memorandum, we could make a case, but we haven't found that yet," he says.
Another attorney, Sean Coffey of Bernstein Litowitz Berger & Grossman, who represents the San Diego County Employees Retirement Association, also holds out the possibility that his client will not sue. "SDCERA continues to evaluate its various options," he says, "but no decision has been made yet whether there will be litigation and, if so, who will be sued."
Hold on a minute. Where are people finding these so-called lawyers who cannot come up with a cause of action after a fund loses $6 billion? Isn't that what lawyers do? Or is that just people who get to call themselves Attorney General?
Perhaps even more importantly, IDD also reports that on Monday Amaranth sent letters telling investors that their long awaited distributions were on the way.
Investors have some reason for cheer, however. On Monday, Amaranth sent them letters indicating that they would receive their first distributions since the blowup, according to executives close to two investors. The executives gave differing accounts of the size of the distribution - one says it is about 15% of remaining accounts, and the other says it is around 21% - but both say further distributions are planned for next month.
Amaranth Fallout Could Hold Surprises [Investment Dealers' Digest subscription only]