FIC LP Sues Bear Stearns over the Collapse of Two Hedge Funds

Bear Stearns was sued in Manhattan Federal Court, over the collapse of the firm’s two High-Grade Structured Credit Strategies, the Enhanced Leveraged Fund, and the Bear’s High-Grade Structured Fund. The lawsuit was filed by FIC, a San Francisco Partnership, which alleges that the Bear Stearns managers engaged in fraud, bad faith and gross negligence. According to published reports, the collapse of the two hedge funds, led to losses of $1.6 billion of investor capital. It has been also reported that Barclays PLC have in a separate filing sued Bear Stearns over the Collapse of the two funds as well.

The FIC LP suit is taking a dimension of class-action lawsuit, seeking to represent all the investors in the two failed Hedge Funds. Federal investigators are looking into the circumstances leading to a $2 million withdrawal made by fund manager, Ralph Cioff, several weeks ahead of the collapse of the Hedge Funds. The US Securities and Exchange Commission along with the US Attorneys Office in Brooklyn are also carrying out criminal and civil investigations of the circumstances leading to the Collapse the two Hedge Funds. Bear Stearns representatives were not available for comment, according to the report.

Hedgefundexchange.net Staff Writers