The lawyers representing Whitney stated in a court filing that BlueCrest “seeks to upend the status quo via a forced redemption of shares that it knew would fluctuate in value over time.”
“This is a blatant attempt to force the fund’s dissolution and create a trust fund in favor of BlueCrest to the detriment of the other innocent fund shareholders and potential fund creditors,” according to the lawyers.
The Odey Special Situations Fund was down 0.27% for April, compared to its benchmark, the MSCI World USD Index, which was up 4.65%. For the first four months of the year, the fund is up 8.4%, while its benchmark returned 9.8%. Q1 2021 hedge fund letters, conferences and more The Odey Special Situations Fund is Read More
Her argument indicates that the dispute between her fund and BlueCrest Capital is heating up. Last December, BlueCrest Capital filed a complaint against Meredith Whitney in Bermuda after she declined to honor fund’s request to redeem its investment.
Meredith Whitney shocked by the redemption notice
Meredith Whitney also argued in the court filing that she was caught “entirely off guard” when she received the redemption notice from BlueCrest Capital. According to her, she was “shocked” by the fund’s indelicate way of informing her about its intention to redeem its investment.
Meredith Whitney was a former banking analyst. He became famous in 2007 when he issued a warning that it would reduce its dividend months before people in the industry perceived that a financial crisis will occur.
Meredith Whitney’s American Revival Fund dropped 11%
BlueCrest Capital’s founder Michael Platt invested $50 million to Meredith Whitney’s Kenbelle Capital on November 2013. Whitney’s hedge fund manages the American Revival Fund, which suffered 11% losses by the end of November last year. Platt’s investment is now worth $46 million.
As a result, the investors of Kenbelle Capital including Platt decided to pull out their investments. The hedge fund’s co-founder Stephen Schwartz, chief financial officer Andrew Turchine and chief administrative officer Brittani Caetano resigned from their positions.
Last week, BlueCrest Capital filed a similar suit against Meredith Whitney in New York. The firm stated that it would drop the case filed in Bermuda.
Earlier this week, New York Supreme Court Justice Jeffrey K. Oing issued a ruling that temporarily prevented Meredith Whitney’s hedge fund from paying investors until a hearing is conducted on the complaint filed by BlueCrest Capital.
Meredith Whitney’s lawyer, Stanley Arvin recently emphasized that the judge ruling maintains a status quo. He also pointed out that the funds have a two-year agreement. He said, “They’ve got to stick to it.”
The full court document can be found below (PDF)