Hedge Fund Employee Who Claims He Was Fired For Getting In Way Of Boss's Plans To Use Investor Funds On South American Condom Factory Will Get His Day In Arbitration

Joshua Terry, come on down.
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By inga (Components for safer sex kitUploaded by Fæ) [CC BY 2.0], via Wikimedia Commons

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Remember Joshua Terry? Ex-Highland Capital portfolio manager about yea high? (We have no idea how tall he is.) Was fired by the firm (and subsequently sued) for allegedly self-dealing, having sexual relations with an underling, and talking smack about Highland executives? Who claims the real reason he was fired was that he raised questions about Highland president James Dondero's alleged plan to "use money due to outside investors...to buy a South American company that he intended to convert into a condom manufacturer" and also about Dondero's alleged use of the term "jackasses" to describe said investors? A judge has said an arbitrator should hear Terry's side of the story.

A state court judge in Dallas on Thursday granted Terry’s request to send the dispute to arbitration. The judge said it made sense to have Terry’s claims considered first by an arbitrator. Highland asked the judge to order Terry not to disclose confidential information, including recordings of the conversations [that Terry secretly recorded his colleagues and investors], and to force Terry’s lawyers to quit because their case benefited from access to the recordings. The judge said the issue of Terry’s lawyers would be up to the arbitrator to decide...Terry’s lawyer, Rogge Dunn, said he and his client were “very pleased with the judge’s ruling.”

Fired Manager Can Challenge Highland Capital in Arbitration [Bloomberg]

Earlier: This Hedge Fund vs. Ex-Employee Lawsuit HAS EVERYTHING

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Highland Capital CEO James Dondero knows what we're talking about. Highland Capital Management LP Chief Executive Officer James Dondero testified in a divorce proceeding that he’s insolvent under Texas family law, if not according to normal accounting rules. Dondero, 49, told Texas state court Judge David Lopez in Dallas yesterday that the 2008 financial crisis took his debt- investing firm “to a state of insolvency and we’ve been juggling liquidity since that.” Highland Capital assets under management fell to $23 billion by Jan. 1 from $39 billion at the end of 2007. “The last three, four years have been negative to the tune of hundreds of millions of dollars,” Dondero said. The money manager said his annual income is “a million, two.” [...] Highland Capital Management LP Chief Executive Officer James Dondero testified in a divorce proceeding that he’s insolvent under Texas family law, if not according to normal accounting rules. Dondero, 49, told Texas state court Judge David Lopez in Dallas yesterday that the 2008 financial crisis took his debt- investing firm “to a state of insolvency and we’ve been juggling liquidity since that.” Highland Capital assets under management fell to $23 billion by Jan. 1 from $39 billion at the end of 2007. “The last three, four years have been negative to the tune of hundreds of millions of dollars,” Dondero said. The money manager said his annual income is “a million, two.” Highland Capital Chief Tells Divorce Judge He’s Insolvent [Bloomberg]

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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]