With New York regulators investigating 30 hedge funds for potential conflicts of interest and insider trading, California attempting to require them to register and the credit markets threatening to wreak havoc on them, hedge fund executives are bracing for a wave of action against them in 2008, The National Law Journal reports.
“Anytime a hedge fund blows up, you are going to see class actions, and a lot of cases are going to end up in [SEC] receivership and bankruptcies,” said Ross Intelisano, whose law firm, Rich & Intelisano, is representing investors in the now-defunct Bayou Group. “We see this as a growing area of our practice. Absolutely, in 2008, this will continue as more hedge funds sink.”
Likewise, Morrison & Foerster created a hedge fund recovery team, whose specialty is credit default swaps, earlier this year.