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"Bullied" Trader Offers Managers Everywhere Genius New Excuse For Poor Performance

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One of the hardest parts of being a hedge fund manager is coming up with new ideas. Not investment ideas but those related to explaining to clients, via letter, why last month/quarter/year went ass-bleedingly bad. There's the challenge of generating new ways to describe the massacre (Sac-ripping, clown-facing, donkey punching, etc), the silver-lining ("Now hear the great news: we've turned every dollar you invested in the beginning of the year into 15 cents"), and, of course, the rationale.

The last couple years have made all of these tasks but the third in particular an extremely difficult enterprise. Stuff like "We lost it all but you can take solace in knowing it’s not us, it’s the market. The global financial markets are wrong, and we happy few at [insert your firm here] are correct, in a way that has yet to reveal itself but rest assured, is coming" is good stuff but at this point stale. Those taking pride in their missives re: what it feels like to be worked over with the spreader and truss bar for 85 straight trading sessions know new material is necessary but what? Think, damn it, think, they say as they sit at their desks, knee high in redemption requests.

If you currently find yourself looking for some fresh ideas/excuses for upcoming love notes re: July losses, consider this one, courtesy of Patrick Evershed, which is really not half bad.

Patrick Evershed, a former New Star Asset Management Holdings Inc. fund manager, can proceed with a lawsuit over claims he was bullied by company founder John Duffield, a London court said. Evershed, 69, can pursue whistleblowing and unfair dismissal claims against the fund, a London appeals court ruled today. New Star had sought to dismiss the whistleblowing claim, which allows him to seek unlimited damages. Most U.K. unfair dismissal claims are capped at about 65,000 pounds ($101,000). Duffield “has been most vile to most of the fund managers for several years and bullying us,” Evershed said in a letter. “In particular he bullied me into reopening my fund. This destroyed the performance of the fund and my reputation.”

Former New Star Fund Manager Evershed Can Sue Over `Bullying,' Court Says [Bloomberg]


Highland Capital Management Founder Sees Your Hiding Of Assets And Raises You A Megalomaniacal Prick

As some of you may recall, back in March, Highland Capital Management founder and CEO James Dondero testified that he is "insolvent under Texas family law, if not according to normal accounting rules," despite a 2010 tax return showing his adjusted gross income that year to be in excess of $36 million. The reason his finances were in question was because Dondero filed for divorce in September, and how much he owes his wife Becky is currently in dispute. Becky is "seeking enforcement of a prenuptial agreement guaranteeing her half of the couple’s community property, capped at $5 million," plus "spousal support and interim attorney fees." James, perhaps you can glean, is hoping it will be less than that and perhaps even nothing. One thing that really didn't help? Patrick Daugherty, a former senior portfolio manager at Highland who quit in October, testified that he met with James Dondero for drinks last month. “He told me his plan was to get his net worth down and pay her as little as possible,” said Daugherty, who was called to the stand by Becky Dondero. That testimony was given on March 28th. On April 11, this happened: Highland Capital Management, the $20 billion hedge fund and private equity firm based in Dallas, has launched a lawsuit that calls its former private equity investing chief a “megalomaniacal” manager who engaged in “abusive tirades” that “dehumanized employees.” Patrick Daugherty is the former head of stressed special situations and private equity at Highland Capital Management, where he was responsible for $8 billion of assets until he resigned in September 2011. Known as a blunt-speaking Texan, Daugherty has served on the board of Metro-Goldwyn-Mayer and as chairman of companies like Cornerstone Health Group. According to a 14-page complaint Highland filed in Texas state court in Dallas earlier in April, Daugherty has been paid in excess of $26 million while at the firm, but voluntarily resigned after “Highland refused to accede to his unacceptable ultimatums and megalomaniacal demands regarding compensation.” The lawsuit claims that Daugherty was “belligerent to peers” and that Highland employees complained and even quit after Daugherty publicly berated them as “‘f—ing idiots’” and disparaged them using other vulgarities. Highland, which has a reputation in the investment community for using hard-hitting tactics, pulls no punches in a lawsuit that at times can appear cruel. It claims that Daugherty’s tenure at Highland was characterized by extreme behavior and his performance diminished over the years as he “became increasingly unmanageable, erratic, and insubordinate.” It didn't have to be this way, Patrick! $20 Billion Highland Capital Calls Former Private Equity Chief "Megalomaniacal" [Forbes]