Decura Says UBS Owes $167 Million Over Hedge Fund Venture

Ex-Goldman Sachs Group Inc. partner Vishal Gupta’s investment firm said UBS Group AG should pay as much as $167 million over a disputed hedge fund venture.

Decura IM Investments LLP said it wasn’t told about a plan to shrink UBS’s investment bank before agreeing to the partnership, according to its court documents from the first day of a London trial. Gupta’s firm is trying to recover everything it spent on setting up the venture, including the cost of hiring employees and the financial impact on them.

UBS “is not the bank with which Decura contracted on May 31, 2012,” Decura said in the documents. “Specifically, it has ceased to carry on a material part of its business.” UBS denies the changes, which it calls “Project Accelerate,” have had a significant impact on its arrangement with Decura.

UBS Chief Executive Officer Sergio Ermotti has scaled down its investment bank to focus on money management while cutting costs to boost profits. The lender announced earnings for July and August that exceeded analyst estimates and were ahead of last year’s third-quarter net income.

Decura argues that the UBS cuts mean the bank isn’t able to market its algorithmic trading and hedge fund products, triggering a termination clause in the contract. “The agreement has, for whatever reason, not got off the ground,” Judge Michael Burton said today.

Hana Dunn, a UBS spokeswoman, said Project Accelerate had been a “great success” for the bank and Decura is “simply wrong about its effect on this particular contract.”

Decura Group was founded in 2012 by Gupta, who previously worked at Goldman Sachs in a variety of roles including head of credit and equity exotics and fund derivatives. UBS agreed to market Decura’s products to its clients, splitting any profits 50-50, according to Decura’s documents. UBS’s profit share would rise to 60 percent on profits over $200 million.

The case is: Decura IM Investments LLP & Ors v UBS AG London Branch, High Court of Justice, Queen’s Bench Division Commercial Court, 14-561

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