Tuesday, July 19, 2011

Fund manager ordered by panel to fork over $5.5 million

Reuters writes that fund manager Neuberger Berman and a wealth adviser were ordered by arbitrators to pay roughly $5.5 million to four investors for selling securities backed by Lehman Brothers debt right before the investment bank collapsed.

A FINRA arbitration panel on Friday ruled that Neuberger, which until 2009 has been a unit of Lehman, and Chicago adviser Brian Hahn were responsible for recouping the initial investment of four clients, plus interest and fees, after selling Lehman-backed notes between June and August 2008.

Accounts held by Ira Robb, Edward Leshin, and Leonard and Kimberly Almalech last year asked arbitrators to award them about $30.2 million in actual and punitive damages after Hahn during the summer of 2008 sold them shares in "comBATS" and "XLF Lehman Brothers Structured Notes," Block said.

One of the clients also invested $1 million in Libertyview Credit Select, a Neuberger-managed fund that lent its assets to Lehman. These notes were in fact backed by Lehman bonds.

Lehman filed for bankruptcy a month later, wiping out their value. The investors complained Neuberger failed to adequately disclose that the notes were essentially Lehman debt….

Read more at http://newsandinsight.thomsonreuters.com/Legal/News/2011/07_-_July/Neuberger_Berman_ordered_by_panel_to_pay_$5_5_million

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