Man Financial Denies Part In Concealment Of Hedge Fund Losses

by Phillip Morton, Investors Offshore.com

06 October 2005

Man Financial, the futures broking arm of the world's largest listed hedge fund firm Man Group, has rejected allegations from a United States receiver that it attempted to conceal trading losses and hide documentation relating to the collapse of the hedge fund Philadelphia Alternative Asset Management (PAAM).

In a contempt motion filed in a Pennsylvania court last week by Clark Hodgson, the receiver to PAAM, Man, which acted as the hedge fund's broker, was accused of helping to disguise the fund's true investment performance by hiding $175 million in losses in a secret account - losses which were not reported to investors.

PAAM, set up and managed by Paul Eustace, was launched last year and raised some $300 million from investors. However, in June this year the fund collapsed.

In a statement, Man said that it was "surprised and disappointed" by the contempt motion, and stressed that it has cooperated with the US authorities by supplying more than 4,200 pages of documentation to assist the receiver.

"The receiver's actions are at odds with public statements he has made to the effect that he has received a 'high degree of cooperation from most parties involved and no one has yet refused to provide documents requested,'" the company stated.

"Since this issue is still subject to legal and regulatory investigation, we have no comment to make on the broader content of the Receiver's motion, other than to say that there are a number of areas where we do not agree with his interpretation of information obtained during his investigation," Man Group added.

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