Late Trading Fraud Claims to Proceed Against Law Firm

A New York state judge will permit a former hedge fund client to bring fraud claims against law firm Akin Gump Strauss Hauer & Feld for having improperly advised the fund that late trading mutual funds was legal,  The New York Law Journal reports. But the judge upheld the law firm’s motion to drop other claims, including negligence and breach of fiduciary duty, against it, since the firm already settled with the New York attorney general’s office.

James McBride and Kevin Larson, principals of the Veras suite of hedge funds, sued the firm for $4.4 billion for allegedly advising them that late trading of mutual funds was legal.

The New York attorney general’s office investigated Veras in 2003, and after the hedge fund firm paid $36 million in penalties and the two principals paid fines of $750,000 apiece and were barred from the industry, Veras shut down.