Appointment Of PAAM Liquidator May Throw Spotlight Back On Man Group

by Amanda Banks, for LawAndTax-News.com, London

09 March 2006

High court judges in the Cayman Islands have appointed Kroll Associates as the liquidator to Philadelphia Alternative Asset Management (PAAM), the Cayman-domiciled hedge fund that collapsed last year amid allegations of fraud, a British press report has revealed.

According to The Guardian, the appointment of a liquidator increases the likelihood of action against associated parties, most notably a subsidiary company of London-based Man Group plc, the world's largest listed hedge fund business.

Man Financial, which acted as broker to the now defunct hedge fund, Philadelphia Alternative Asset Management (PAAM), was accused in a contempt motion filed in a Pennsylvania court in September by the court-appointed receiver Clark Hodgson, of complicity in helping PAAM to disguise the fund's true investment performance by hiding $175 million in trading losses in a secret account - losses which were not reported to investors.

In December, Man was ordered to hand over documents and other information, including telephone records and audio recordings to the receiver of the collapsed hedge fund.

Man Group has strenuously denied allegations that it failed to cooperate with the US authorities in the investigation, and has stressed that it has handed over thousands of pages of documentation to assist the receiver.

Cayman-registered PAAM, set up and managed by former trader Paul Eustace, was launched in 2004 and raised some $300 million from investors. The fund collapsed in June 2005.

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