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Paulson Hedge Fund, Full-service Brokerage Firm Feeder Fund Investors Could Recover Losses
Securities fraud attorneys are currently investigating claims on behalf of investors with full-service brokerage firms who suffered significant losses as a result of their investment in Paulson & Co.’s Advantage and Advantage Plus hedge funds. Reportedly, the Advantage Fund’s value declined 51 percent in 2011 and 19 percent in 2012. According to Securities and Exchange Commission filings, many major brokerage firms including Citigroup, Morgan Stanley, Merrill Lynch and UBS Financial Services used proprietary “feeder” funds to invest in the Paulson funds.
The feeder funds used by full-service brokerage firms to invest in Paulson’s Advantage and Advantage Plus Funds went by a variety of names, such as LionHedge Paulson, UBS Paulson Advantage Fund, Morgan Stanley HedgePremier Paulson, Paulson Advantage Access Fund and CAIS Paulson. Stock fraud lawyers say that all of the aforementioned funds invest in Paulson’s funds and that in some cases they may not have provided oversight or due diligence in the funds, despite representations made to investors.
Following the Advantage Fund’s decline, in May 2012 the fund was put on Morgan Stanley Wealth Management’s “watch list” and investors are now being advised to redeem. Three months later, Citigroup reportedly made a similar decision, pulling $410 million from Paulson’s funds. In light of the fact that the Paulson funds were sued by an investor in February 2012, many investors are contacting securities fraud attorneys about their losses. In the 2012 lawsuit, both Paulson & Co. and its funds were charged with deeply investing into SinoForest without conducting adequate due diligence and accused of breach of fiduciary duty.
If you invested in one of the Citigroup, Morgan Stanley, Merrill Lynch or UBS Financial Services feeder funds listed above, you may be able to recover your losses through securities arbitration. To find out more about your legal rights and options, contact a stock fraud lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.