According to Bloomberg, a lawsuit filed against Bear Stearns Cos and two of its former managers has been amended. The suit seeks $1.5 billion in damages and accuses the company and its former managers of committing fraud. The lawsuit was originally filed on April 4, after two Bear Stearns hedge funds collapsed, and sought $1 billion in damages.
The Bear Stearns managers have been indicted and accused of providing false and misleading information to investors regarding the hedge funds. The amendments to the complaint include information released from the indictments, including emails that allegedly show the managers were aware of the declining value of the hedge funds. Despite this, the managers sold the hedge funds as being safe investments.
The lawsuit accuses Bear Stearns and its managers of violating their fiduciary duty by providing investors with false information regarding the hedge funds. Specifically, investors say they were told that the Bear Stearns mortgage hedge funds were relatively safe and conservative investment vehicles. According to the lawsuit, the hedge funds were not designed to withstand even slight downturns in the housing market. The funds were invested in subprime mortgages and collapsed in July 2007.
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Hedge fund managers have a duty to act in the best interests of their clients, rather than in the interests of the funds. Managers are required to provide accurate information regarding the stability and financial situation of the funds they manage. Failure to do so is a violation of fiduciary duty.
If you were given false information regarding hedge funds and made investment decisions based on that information, you may be eligible to file a lawsuit. Contact a lawyer to discuss your legal options.