Securities Arbitration Panel Awards Hedge Fund Manager $61 Million

 

A Financial Industry Regulatory Authority (FINRA) arbitration panel has ordered Societe Generale SA and affiliates to pay $61 million to Aurum STS Aggressive Trading LLC, a California fund manager. The dispute involved warrants sold to Aurum by a unit of Societe Generale.

The value of the warrants was based on the net asset value of the Aurum Leveraged Fund S1, which was linked to the leveraged performance of a basket of hedge funds. Aurum claimed it had the right to receive a payment from Societe Generale upon the expiration of the warrants in November 2008.

After the 2008 market collapse, Societe Generale informed Aurum that it would not honor its payment obligations under the warrant, and instead would proceed under new terms that Aurum had not agreed to.

The FINRA panel awarded compensatory damages in the amount of $125,948,119.00 less payments already made by Societe Generale to Aurum in the amount of $91,938,597.63, for a net amount of $34,009,521.37.

The Panel also awarded interest in the amount of $26,990,647.67, representing almost 3 years of interest at 9% per annum on the gross amount of $125,948,119.00.

The Panel further assessed all hearing session fees in the amount of $40,650.00 against Societe Generale.

Many investors, both individuals and corporations, were misled by their brokers and harmed during the credit crisis. For various reasons, however, many such investors have not yet taken action to recover their losses. Some have delayed taking action in order to see whether the misconduct warranted legal action while others just put it off until a later time. Investors need to appreciate that time is running out on their claims, and they should act now or forever hold their peace.

As has been reported, a number of corporations, institutions and government agencies have recently filed actions against brokerage firms and banks that misled them about the true risks associated with the securities that were sold to them.

J. Boyd Page, the senior partner of Page Perry, an Atlanta-based law firm, said: “We are seeing a marked increase in the number of institutional and individual plaintiff-recovery actions both here in the U.S. and all over the world. While many such investors are financially sophisticated, they have come to realize that they could not bring their sophistication to bear when material facts are misrepresented or omitted in a way that makes what was disclosed misleading.”

Page Perry is an Atlanta-based law firm with over 150 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 45 occasions. For further information, please contact us.