- Boaz Weinstein, Canada fund reject mediation proposal
- Canada pension fund claims it was ripped off on investment
Boaz Weinstein won’t go down without a fight.
Weinstein and his $1.6 billion Saba Capital Management LP hedge fund were sued last month by one of its former investors, Canada’s Public Sector Pension Investment Board, which accused the firm of manipulating the value of its investment in McClatchy Co. bonds.
The two sides were ordered to have a third party mediate the dispute earlier this month under a New York state court pilot program. On Wednesday, the parties agreed to opt out of mediation, saying it would be “ineffective at this stage of the proceedings.”
Weinstein has vowed to fight the suit and asked a judge to dismiss the case the day after mediation was ordered, saying the pension fund “recklessly and maliciously attacked” his firm, which did “absolutely nothing wrong” and won’t settle the case for a penny.
The Montreal-based pension fund, which oversees the retirement savings of Canadian federal employees, said it was the Saba Offshore Feeder Fund’s largest investor before asking to pull its money in January, having invested $500 million in 2012 and 2013, according to the suit.
The pension fund accused Saba and Weinstein of marking down a significant part of its portfolio after it asked for all its money back by the end of March, then boosting the value of the assets in April and depriving the fund’s investors of their due, according to the complaint.
The claims in the suit could limit the 42-year-old Weinstein’s ability to raise capital as he seeks to rebuild his business, which has been hit by a 20 percent loss from the beginning of 2012 through last year. The tumble caused clients to pull billions, and employees, including three long-time executives, to leave the firm that once managed $5.5 billion.
Weinstein said in a filing seeking dismissal of the lawsuit that the firm has the discretion to determine the net asset value of its investment in bonds and that investors were told the firm was allowed to value securities as it "reasonably determines." The pension fund didn’t cite any specific breach of contract in its complaint, Weinstein said.
The Canadian pension fund had $112 billion of assets under management as of March 31, according to its website.
The case is Public Sector Pension Investment Board v. Saba Capital Management LP, 653216/2015, New York State Supreme Court, New York County (Manhattan).