NEW YORK (HedgeWorld.com)–Legal woes are mounting for Lipper & Co., which was named in a federally filed class action lawsuit, and also reportedly was sued by the blind trust of Sen. Earnest “Fritz” Hollings, a South Carolina democrat.

Lipper’s convertible hedge fund collapsed last year after disclosures of mispriced securities, and Lipper last month officially closed for business. Previous HedgeWorld Story The class action suit was filed with Fredda Levitt as the plaintiff, said Andrew N. Friedman, an attorney for Cohen Milstein Hausfeld & Toll, the New York firm handling the suit.

The suit was filed on behalf of people who invested in the hedge fund Lipper Convertibles LP during the period when Lipper supposedly had overvalued fund shares. As such, Cohen Milstein is seeking to represent anyone who invested in the fund the period from Jan. 13, 1998 to March 26, 2002. Named in the suit are: Ken Lipper, founder and chief executive; Lipper Holdings LLC, the general partner; and Abe Biderman, executive vice president for Lipper.

Mr. Friedman said he believes their suit is the first class action taken in Federal court, though he has heard of state class action suits and individual suits in Federal court. One of those suits, according to Business Week, accuses Lipper of allowing friends and relatives to withdraw money from the fund in the months before the funds collapsed, as a result of losing investments and mispricing in the fund. The suit was filed in federal court in South Carolina. Mr. Biderman told Business Week the suit had no merit.

Recently faced with two competing plans supported by Lipper investors on how to revalue remaining assets in it convertible arbitrage fund, New York State Supreme Court Judge Karla Moskowitz decided on an intermediate solution that gives investors some of the money back.

PBarr@HedgeWorld.com