NEW YORK (HedgeWorld)–The appellate division of the Supreme Court of New York rejected an appeal by Kenneth Lipper, the principal of Lipper Holdings LLC, in which he objected to the trial court’s ruling that he must repay certain incentive compensation to the limited partners.
Lipper Holdings was the general partner in certain hedge funds from which Mr. Lipper received performance fees based upon numbers that since have been discredited, according to the findings of the trial court judge, Karla Moskowitz, who ordered repayment.
“For 10 years, he [Lipper] took millions of dollars based on what he claimed was growth,” in the words of one attorney involved in the ongoing litigation on behalf of the some of the funds’ investors.
The rejection of Mr. Lipper’s appellate arguments, in a Nov. 13 decision, is the latest step in a drawn-out tumble from grace for the former deputy mayor of New York. After Mr. Lipper left city government and entered the world of finance, he met movie director Oliver Stone, becoming a consultant for Mr. Stone’s “Wall Street.”
From that start he became the investment consultant to the stars and founder of Lipper & Co., which for a brief time was, or seemed to be, a very successful convertible bond arbitrage fund manager. But in February 2002, Mr. Lipper abruptly announced massive losses at its funds, and his intention to liquidate
Pursuant to this intention, he asked the auditor BDO Seidman to look over his portfolio. They came out with a report in October that concluded that Lipper’s funds had been mispricing their assets at least since 1995.
Lipper had maintained, and still maintains, that he had been making money until early 2001. Another auditor, PricewaterhouseCoopers, backed him up on this.