Corporate & Securities Law

Friends of Wall Street Law Blog score big litigation triumph over JPMorgan for BSAM hedge fund fraud.  

Reuters, which distributed the following report (below) is not affiliated with Wall Street Law Blog, which wrote and is responsible for the content of this introduction.  

-INTRODUCTION

An investor represented by Rich & Intelisano, prevailed in a FINRA arbitration on claims seeking recovery of the investor's losses.  The FINRA Arbitration Award against JPMorgan Chase for fraud-based claims and other misconduct by employees of former investment bank Bear Stearns and its subsidiary, Bear Stearns Asset Management:  

Once upon a time, my great old friend Ross B. Intelisano did me the honor of serving as an usher in my wedding party.  I remember the day very well.  Or possibly my vivid memories are really just memories of looking at all the great photographs.  Anyway, it was quite a few years ago.  

My wife and I were married at a beautiful country club in Alpine, NJ.   Alpine is carved out of a very old, very dense forest not unlike the thick woods that cover the Green Mountains of Vermont.  The club sat (it is gone now) high above the Hudson, on that hilly plateau that stretches west from the steep cliffs of the Palisades on the New Jersey side of New York's most famous river.  Across the Hudson from northern Bergen County is the similar terrain of Westchester County, New York.   

Back to Mr. Inteliano (and my wedding).  Summer was nearly over.  The sky was French blue-  no clouds.  Happy hour.  Miles of perfectly manicured fairway grass.  Every two to three yards, the greenskeepers changed direction so that the grass was cut with the grain here, and against the grain there. The result of what had to be a laborious mowing process was a pattern of diagonal stripes that alternated between light and dark shades of technicolor green.  Diagonal stripes were in style, and the fairways looked like ultra-green power ties. 

The sun was about 3/4 of the way across the sky, descending toward the western horizon.  Still about an hour from sunset, the whole golf course was bathed in a very clear, very bright, white light.    Lots of late summer crickets were whistling.  Locusts buzzed.  The wedding party unanimously agreed that we should fill plastic pitchers with adult beverages and do the wedding photos outside.  

Yep, it was a long time ago.  But Ross Intelisano was right there - a big part of one of the greatest days of my life.

Today, Ross is a partner in Rich & Intelisano, a Manhattan law firm.  Rich & Intelisano, like The Sherman Law Firm, represents investors in securities litigation and FINRA Arbitration on a variety of issues, including legal claims for losses related to the global financial crisis.  

The consensus at Wall Street Law Blog is that the decision explained by Reuters (below) is the right result. Nice job by Claimant's lawyers.  Big win! 

Edited by Brett Sherman, THE SHERMAN LAW FIRM

Reuters

Investor in defunct Bear fund wins $3.4 mln award 

Tue, Feb 9 2010 

* Award follows acquittal of fund managers 

* JPMorgan Chase is responsible for paying the investor 

By Matthew Goldstein 

NEW YORK, Feb 9 (Reuters) - A Georgia-based chain of service stations that lost money with a Bear Stearns hedge fund that 

collapsed in July 2007 has won a $3.4 million arbitration award. 

The award by the securities industry arbitration panel is the first ruling in favor of an investor in one of two now defunct Bear 

hedge funds since a jury acquitted the funds' former managers of criminal charges in November. 

The award suggests that investors who lost $1.6 billion in the collapse of the two highly leveraged funds may still be able to 

recoup some of their money. The award was made on Dec. 23 and was posted recently on a website maintained by the 

Financial Industry Regulatory Authority. 

The three-member arbitration panel, as is customary, did not offer much of a rationale in its written decision for the award of 

$3.4 million in damages to Racetrac Petroleum Inc, an Atlanta-based chain of more than 525 gas stations and convenience 

stores across the U.S. Southeast. 

The award represents 70 percent of Racetrac's $5 million investment in one of the former Bear funds, according to a copy of 

the arbitration award posted on the website. 

Ross Intelisano, one of Racetrac's attorneys, declined to comment on the award. Carl Bolch, chief executive officer of privately- 

held Racetrac, did not return a phone call. 

The arbitration panel reached its decision after holding 32 hearing sessions last year. Six of those hearings took place in 

December, after a Brooklyn, N.Y., jury acquitted former Bear managers Ralph Cioffi and Matthew Tannin on Nov. 10. 

Federal prosecutors had charged the pair with lying to investors about the health of the funds, which had invested heavily in 

complex bonds backed by subprime mortgages. The summer 2007 collapse of the funds, which at their peak controlled more 

than $30 billion in mortgage-related securities, is often seen as the start of the financial crisis. 

The arbitrators found that Bear, which is now part of JPMorgan Chase & Co <JPM.N>, was negligent and failed to adequately 

supervise the funds. 

The Racetrac ruling shows that even though Cioffi and Tannin were acquitted, "they can still be held responsible in an 

arbitration forum for their misconduct," said attorney Steven Caruso, who represents Bear fund investors in a number of 

pending arbitrations. 

The ruling is a blow to JPMorgan Chase, which assumed most of Bear's legal liabilities when it acquired the ailing investment bank in March 2008. 

Go to Reuters to read the rest of the story...