Like most hedge fund managers, James McBride and Kevin Larson expected to make a tidy sum. By the fall of 2003, they seemed well on their way. The series of Veras funds they had launched less than two years before had already attracted around $1 billion in investments.
But then regulators, including then-New York state Attorney General Eliot Spitzer and the Securities and Exchange Commission, came after the Veras funds for "late trading," the illegal purchasing of mutual fund shares after the 4 p.m. market close. Veras wound up paying more than $36 million in penalties before shutting down. McBride and Larson each paid $750,000 and were barred from the industry.
But the ex-fund managers are still out for big money, this time from the law firm they claim advised them that late trading was legal. In February, the former hedge fund managers filed suit against Akin Gump Strauss Hauer & Feld in Manhattan Supreme Court.
Their damages claim? A whopping $4.4 billion, not including punitive damages.
Details here from the New York Law Journal via Law.com.