Patrick Evershed, a former New Star Asset Management Holdings Inc. fund manager, can proceed with a lawsuit over claims he was bullied by company founder John Duffield, a London court said.
Evershed, 69, can pursue whistleblowing and unfair dismissal claims against the fund, a London appeals court ruled today. New Star had sought to dismiss the whistleblowing claim, which allows him to seek unlimited damages. Most U.K. unfair dismissal claims are capped at about 65,000 pounds ($101,000).
Evershed wrote a letter to New Star’s human resources department complaining of Duffield’s conduct in 2008. Evershed was suspended by the fund’s chief executive officer, Howard Covington, shortly after, he said, according to the judgment.
Duffield “has been most vile to most of the fund managers for several years and bullying us,” Evershed said in the letter. “In particular he bullied me into reopening my fund. This destroyed the performance of the fund and my reputation.”
Evershed said he joined New Star under the agreement that his fund, New Star Select Opportunities Fund, wouldn’t exceed investments of 50 million pounds, a limit he said was critical to its success, according to the judgment.
The fund performed well and Duffield forced him to allow the investments to triple, leading to an underperformance, Evershed said. Another executive, New Star’s then joint chief investment officer, subjected him to “humiliating conduct,” Evershed said.
The New Star fund declined 47.9 percent in 2008 and was down 13.68 percent in 2007, according to data compiled by Bloomberg. It had returns of 46.3 percent in 2003 and 18.7 percent in 2004.
New Star was bought by Henderson Group Plc last year for about 107 million pounds in cash and stock after it buckled during the credit crunch, hobbled by a loan it took out to fund a shareholder payout.
New Star has denied the allegations and said that Evershed resigned, according to the judgment.
“This is a legacy issue,” a spokeswoman for Henderson said. “Henderson was aware of it when they bought New Star. It is now up to the employment tribunal to decide.”
Evershed now works in the fund management department at Hargreave Hale Ltd. stockbrokers in London, where he advises private clients. He said that Henderson’s “case is hopeless.”
“All my former colleagues from New Star are lined up behind me,” Evershed said in a telephone interview. “They are totally sympathetic and agree with me.”
Rathbone Special Situations Fund
Evershed’s U.K. stock fund was the third-best performer among the 308 funds tracked by Standard & Poor’s U.K. All-Companies category when he left his previous job at Rathbone Brothers Plc in 2002. His Rathbone Special Situations Fund gained 8 percent in 2001, compared with the FTSE All Share Index’s 19 percent decline.
Evershed joined New Star in 2002 after he was recruited by Duffield. He sued the fund in October 2008.
Duffield “has created a most unpleasant atmosphere throughout the firm,” Evershed said in his letter to New Star’s human resources department. “He recruited stars and then destroyed them by the way he treated us.”
The case is New Star v. Evershed, No. A2/2009/1841, Court of Appeal (Civil Division), on appeal from the Employment Appeal Tribunal (London).