May 25 (Bloomberg) -- Highland Capital Management LP won a Texas court ruling ending a four-year-old lawsuit filed by investors claiming they were misled about the health of two hedge funds that were later closed.
Dallas County Judge Dale Tillery granted Highland’s motion in a ruling earlier this week, following arguments April 19.
“Having reviewed the evidence submitted by the parties and after conducting a hearing on the matter, the court is of the opinion that defendants’ motion should be granted,” the judge said in a two-page ruling.
LV Highland Credit Feeder Fund LLC and other investor plaintiffs claimed in a 2009 complaint that Dallas-based Highland misled investors by withholding requested information about the rate of withdrawals before the firm began winding down Highland Credit Strategies Fund LP and Highland Credit Strategies Fund Ltd.
The plaintiffs alleged in court papers their redemption percentage of the funds’ liquidated value was “paltry.” As of June 2008, LV Highland Credit Feeder Fund’s stake in Highland Credit Strategies Fund LP had been valued at more than $40 million, according to the complaint. Six other plaintiffs held lesser-valued stakes in the funds.
“Our case is based on misconduct,” Geoffrey Jarvis, a lawyer for the plaintiffs, told Tillery at the April hearing. “They lied to us.” The plaintiff investors said they would have gotten out if they’d known the true pace of redemptions that totaled $467 million, or 42 percent of one of the funds, in April 2008 alone.
“This is a seriously flawed case based on things that don’t exist,” Highland lawyer Michael Aigen said in court that day, contending there was no evidence of falsity or fraud. Highland personnel had expressed “vague opinions” about the state of the fund, not specific incorrect information.
Thomas Becker, a spokesman for Highland, declined to comment. Jarvis didn’t immediately reply to an e-mail seeking comment after regular business hours.
The case is LV Highland Credit Feeder Fund LLC v. Highland Credit Strategies Fund LP, DC09-08521, Dallas County, Texas District Court, 134th Judicial District (Dallas).
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