Saturday, March 3, 2007

Employment Suits Against Hedge Funds Increasing

HedgefunsPeter Lattman over at the WSJ Law Blog has the 411 on this developing trend:

Lawyers say employment lawsuits against hedge funds are on the rise. “Ten years ago, there were virtually no hedge-fund employment lawsuits; five years ago, there were a few,” says Jeffrey Liddle, managing partner at Liddle Robinson in New York. “Today, once a week we get a call.”

The growth reflects a new reality of the hedge-fund world: These lightly regulated investment pools that once served as a haven for traders frustrated with Wall Street bureaucracy have themselves burgeoned into large, deep-pocketed institutions. And their employees’ expectations have changed. “In the old days,” says Schulte Roth partner Paul Roth, a hedge-fund boss “could come in and say, ‘You’re gone.’ Now [employees] will ask, ‘What do you mean? You can’t fire me!’”

Peter refers to a story in the main Journal that suggests that hedge-funds are fighting back. 

That may be the case, but that just means they are like any other large, deep-pocketed corporation that is increasingly facing employment discrimination and other types of employment suits in this litigious environment.

I think the more interesting angle with hedge-funds and the employment law world is in the area of employee benefits where benefit plan administrators are increasingly relying on these sometimes risky investment vehicles for their employees' retirement benefits. The number of breach of fiduciary duty claims in this area are continuing to increase.

Susan Mangerio over at Pension Risk Matters has done a great job documenting this phenomenon on her blog for the last year or so.


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