Legal investigation targets funds of hedge funds

Keller Rohrback is focusing on whether hedge funds paid funds of hedge funds to be included in their investment structure.

Michael Woerner, attorney at Keller Rohrback, told schemeXpert.com: “There is a high possibility there could be a class action structure on this case since a whole host of investors might have been injured in the same way.”

In the past, UK pension funds have participated to US collective lawsuits. Last year, the Merseyside and North Yorkshire County Council pension funds even applied to be lead plaintiffs in the class action brought in the US against the Royal Bank of Scotland.

Overseas lawyers say increased awareness of pension funds' fiduciary duties has led to a number of US class actions in which UK schemes are involved in different ways.

UK schemes were sometimes denied participation in these lawsuits by US courts. In such cases, the schemes could either try to pursue an individual claim or try to seek redress under a different jurisdiction.

A lot of funds of hedge funds are managed by legal entities based in offshore financial centres. This could make the prosecution of potential frauds in US courts more complicated.

Woerner said Keller Rohrback was looking at offshore structures as well. He said: “These types of frauds occur all over the world and we are carefully screening whether or not those claims can be brought to the US.”

The attorney said the law firm had not spoken to investors yet. Nor is it liaising with any other law firm on this investigation. But collaboration with other lawyers is very common in the US in large cases structured as class actions.