Posted Aug 15, 2007 10:36 am CDT
Akin Gump Strauss Hauer & Feld is facing a $4.4 billion lawsuit filed by two former hedge fund managers who claim the law firm provided bad legal advice that cost them their livelihoods.
James McBride and Kevin Larson managed a series of Veras funds with more than $1 billion in investments, the New York Law Journal reports. Their suit alleges Eliot D. Raffkind of the firm’s Dallas office had given the go-ahead to two trading practices later deemed illegal by the New York Attorney General’s Office and the Securities and Exchange Commission.
Veras paid more than $36 million in penalties to settle. McBride and Larson each paid $750,000 and were barred from the industry for 18 months.
The suit claims the law firm OK’d late trading in mutual funds and said it was permissible to consider information gained after the market closed. It also claims the firm authorized “timing capacity” agreements with mutual funds that permit short-term trading in some funds in exchange for long-term investment in others.
A law firm spokesman says the allegations are without merit.