Legal Question in Securities Law in New Jersey

Action against fund manager

My brother invested in a fund. The fund manager alleged that he made poor investments and lost $3,000,000.00 of investments. The manager filed bankruptcy, but the debts to investors were determined to be non-dischargeable. He also pled guilty to a count of federal mail fraud ( He claimed that he made poor investments, but didn't show same on the quarterly statements). In fact, everyone believes that the guy embezzled the money. In any event, my brother wants to pursue legal action against the manager. Any thoughts?


Asked on 2/07/02, 3:08 pm

1 Answer from Attorneys
Nicholas Guiliano Arbitration, Securities & Investment Fraud Lawyer

Re: Action against fund manager

Taking legal action against the fund manager, while the liability sounds compelling, the collectibility of any such judgment seems highly unlikely. Bankruptcy aside, the man may be headed for the penitentiary. No one wants to wait to get paid, especially when one may have to wait forever. How much did your brother lose? Why not sue the fund, or the broker who sold the fund. Someone sold securities. They may be liable under Section 12(2) of the 33 Act. Someone filed periodic statements that were false. Who are the players? If your brother lost enough money, it may be economical to bring an action against the proper parties. The problem may be that when everyone sues the manager in Bankruptcy for indemnification or contribution, your whole case will be stayed by the bankruptcy court until the year 2010??

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Answered on 2/08/02, 7:23 am


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