Cohen, Milstein, Hausfeld & Toll, P.L.L.C. Files Class Action Securities Fraud Suit On Behalf of Persons Who Invested In Lipper Convertibles, L.P.
January 13, 2003
Cohen, Milstein, Hausfeld & Toll, P.L.L.C. has filed a securities fraud class action lawsuit in the U.S. District Court for the Southern District of New York on behalf of its client and other Limited Partners who invested in Lipper Convertibles, LP ("the Partnership") during the period from January 13, 1998 through March 26, 2002 (the "Class Period"). The suit names the following persons as defendants: the General Partner, Lipper Holdings, LLC; Kenneth Lipper, the Chairman, Chief Executive Officer and President of Lipper Holdings, who was responsible for supervising the day-to-day operations of the Partnership; Abraham Biderman, the Executive Vice-President of Lipper Holdings and the co-manager of the Partnership, who was responsible for managing the day-to-day operations of the Partnership; and Edward Strafaci who was until his sudden and unexpected departure in January 2002, the CO-manager of the Partnership and who was responsible for managing the day-to-day operations of the Partnership. Lipper Convertibles is a Limited Partnership which was designed to invest and which the General Partner and the other defendants represented was engaging in "convertible arbitrage" by investing "a preponderance of the Partnership's portfolio" in "investment grade securities of substantial public companies with market liquidity." In a letter to the Limited Partners dated February 20, 2002, the General Partner shocked the public, the convertible hedge fund industry and the Limited Partners by revealing that the assets of the Partnership had been substantially overvalued and that the actual value of the assets of the Partnership would be devalued "in the neighborhood of 40%." By March 26, 2002, the General Partner, Lipper Holdings, decided to dissolve the Partnership and sold all the securities held by the Partnership. On October 3, 2002, the General Partner filed an action for dissolution of the Partnership in the Supreme Court of New York, which is ongoing. This Complaint alleges that the defendants had artificially inflated the value of the Partnership's assets, profits and performance from 1995 through 2001 by utilizing pricing policies and valuation practices that violated the terms of the Partnership Agreement, the representations in the Offering Memoranda, and generally accepted accounting principles. The Complaint also alleges that the "Independent Inquiry" conducted by the Special Counsel hired to investigate the pricing practices at Lipper, recently concluded that the General Partner's valuations were not "supported by any rational basis." As a result of the defendants' overvaluation, the Complaint alleges that the Limited Partners suffered damages by paying an inflated value for their investment in the Partnership, overcompensating the General Partner, defendant Lipper Holdings, by paying an incentive compensation fee based on inflated profits and performance, and overcompensating other Limited Partners who withdrew funds from the Partnership during the period of overvaluation. The Complaint further alleges that the defendants invested Partnership assets in unsuitable investments - risky and illiquid securities - which violated the terms and representations of the Offering Memorandum. As a result of these unsuitable investment of Partnership assets by defendants, the Limited Partners who are members of the Class suffered damages by being invested in risky investments in which they would not have otherwise invested and suffering losses which would not have occurred but for the investment of Partnership assets in unsuitable, risky and illiquid securities. The Complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by misrepresenting the profits, performance, value of Partnership assets, the risk of investing in the Partnership, the securities in which the Partnership was invested and the overall investment strategy of the Partnership. As the Complaint alleges, these misrepresentations caused the Plaintiff and other members of the class to purchase interests in the Partnership at artificially inflated prices and/or suffered losses which they would not have otherwise suffered. Additionally, the Complaint asserts claims on behalf of the Partnership against the General Partner, defendant Lipper Holdings, for breaches of fiduciary duty, breaches of the Partnership Agreement and unjust enrichment. If you invested in Lipper Convertibles, LP between January 13, 1998 and March 26, 2002, you may request that the Court appoint you as lead plaintiff no later than March 14, 2003. In order to serve as lead plaintiff, you must meet certain legal standards. If you have questions with regard to this case, your rights or serving as a lead plaintiff, you may contact one of the following: Andrew N. Friedman, Esq. afriedman@cmht.com
R. Joseph Barton, Esq. jbarton@cmht.com
Cohen, Milstein, Hausfeld & Toll, P.L.L.C.
1100 New York Avenue, N.W.
Suite 500 - West Tower
Washington, D.C. 20005
Telephone: 888-240-0775 or 202-408-4600
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- Ken Lipper Faces a Big-Time Payback - November 20, 2003
- SEC Announces Charges Against Former Portfolio Manager of the Lipper Convertible Hedge Funds - October 29, 2003
- Former Lipper Exec Indicted for Overvaluing Funds - October 29, 2003
- Was Lipper Looking Out for His Friends? - January 16, 2003
- Fritz Hollings Wants His Money Back - January 14, 2003
- Cohen, Milstein, Hausfeld & Toll, P.L.L.C. Files Class Action Securities Fraud Suit on Behalf of Persons Who Invested in Lipper Convertibles, L.P. - January 13, 2003
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