Two leading Sydney businessmen are suing the hedge fund firm, Everest Financial Group, for breach of guarantee and misleading and deceptive conduct in relation to two registered Everest management investment schemes in which they invested $5 million.
Brothers, Bernard and Maurie Stang, are claiming the former Babcock and Brown backed Everest Capital Limited and two of its directors, Jeremy Reid and Steven Eckowitz induced them to invest in the schemes with performance guarantees of up to 6.75 percent per annum.
The brothers claim they were also given a commitment by Reid and Eckowitz that they would not redeem their own investments without providing notice to Bernard and Maurie beforehand. It is alleged that Reid and Eckowitz breached that commitment.
The brothers also claim Reid and Eckowitz had failed to deliver on verbal and written guarantees that their investments would be highly diversified and managed to the highest standards of corporate governance.
Mr Van Moulis, Slater and Gordon Group Practice leader, said Bernard and Maurie had been given guarantees about the performance of two Everest managed investment schemes which at every turn failed to materialise.
“Despite the performance guarantees made to Bernard and Maurie, in late 2008 the investments in the two Everest managed investments schemes were frozen, and remain frozen preventing them from reinvesting their investment elsewhere to recover the losses on the investments.
“This occurred after Reid and Eckowitz redeemed their own investments in the schemes in February 2008 and despite the guarantee given to the Stang brothers that neither Reid nor Eckowitz would redeem their own investments in the schemes without informing the brothers first.”
A statement of claim and other legal documents relating to the case were filed in the in the Federal Court of Australia, Sydney registry on 7 December, 2010.
Bernard and Maurie Stang are claiming Everest Capital Limited, Jeremy Reid and Steven Eckowitz contravened the Corporation Act 2001 (Cth), the Australian Securities and Investments Commission 2001 (Cth), (the Fair Trading Act 1987 (NSW)) and contract law.
The case isn’t expected to be heard until the New Year.