Investors in Defunct Hedge Fund Sue UBS: WSJ

Wednesday, 23 May 2007 | 1:15 AM ET

Investors in Wood River Partners have sued UBS, alleging the defunct hedge fund's prime broker fraudulently earned more than $100 million by misusing knowledge of its trades, the Wall Street Journal reported on its Web site on Wednesday.

The plaintiffs, who collectively invested $79 million in Wood River, allege in the lawsuit filed in a New York state court that UBS earned profits by selling borrowed shares in the fund's biggest single stock holding, Endwave , and helping other UBS clients do the same, the paper said.

The lawsuit claimed $200 million in damages, the paper said.

UBS could not be reached immediately. But the Journal quoted a spokeswoman as saying: "UBS intends to defend itself vigorously against these allegations."

Wood River collapsed in late 2005. Earlier this year, U.S. authorities charged its founder, John Whittier, with defrauding investors out of $88 million. Whittier has pleaded not guilty to the charges.

Prosecutors have said Whittier, the former co-head of media and telecoms equity research at Donaldson, Lufkin & Jenrette, amassed an 80% stake in Endwave, a small California telecoms company, between 2004 and 2005, but failed to disclose the holding either to investors or to the U.S. Securities and Exchange Commission.

  Price   Change %Change


Contact U.S. News


    Get the best of CNBC in your inbox

    › Learn More

Don't Miss

U.S. Video

  • Rob Sanderson, MKM Partners analyst, breaks down the Internet giant's first quarter results. It's slight growth but far from what we need to see, says Sanderson.

  • China's economy grew an annual 7.4 percent in the first quarter, beating expectations, reports CNBC's Eunice Yoon.

  • Bitcoin. Digital gold rush or a shadowy tool empowering criminals on the dark web? What is really driving The Bitcoin Uprising? CNBC's Mary Thompson takes an in-depth look at this emerging digital currency by speaking to the bitcoin faithful, who believe the open source currency will upend the global financial system, as well as those who believe bitcoin is an easily manipulated tool that empowers criminals, hackers and drug barons in the dark online underworld. Although the future of bitcoin is uncertain, The Bitcoin Uprising sheds much needed light on the speculative currency and the future of money.