In a letter to investors last week announcing its closure, Archeus Capital Management squarely placed blame on the shoulders of its administrator, GlobeOp Financial Services because of its allegedly poor record-keeping. According to a source familiar with the matter, New York-based Archeus reportedly is “not ruling out any options,” even suing, but even if the hedge fund does court trouble for the administrator, there is a big IF it can succeed, reports Reuters. GlobeOp says it “totally disagrees with the allegations,” and will not take the role of fall guy lightly. “While it is easy to point fingers at third parties,” GlobeOp told Reuters, “investors typically liquidate based on fund performance results,” thus piercing Archeus’ assertion that its AUM dropped from $3 billion to $700 million because of the administrator’s faulty records. Harry Davis, HF attorney at the law firm Schulte Roth & Zabel, said in an interview with Reuters. “If you assume that in fact GlobeOp was grossly negligent or reckless and that caused the problems at Archeus,” he said, “it sounds like Archeus may well have a claim against GlobeOp...But it is really hard to prove that there is a sole reason that investors redeemed.” Meanwhile, industry observers are saying Archeus has to assume some responsibility and could have avoided its current problems had it not relied solely on its administrators and independently backed up its records.
Pain In The Archeus For Administrator
In a letter to investors last week announcing its closure, Archeus Capital Management squarely placed blame on the shoulders of its administrator, GlobeOp Financial Services because of its allegedly poor record-keeping.
November 3, 2006
In a letter to investors last week announcing its closure, Archeus Capital Management squarely placed blame on the shoulders of its administrator, GlobeOp Financial Services because of its allegedly poor record-keeping. According to a source familiar with the matter, New York-based Archeus reportedly is “not ruling out any options,” even suing, but even if the hedge fund does court trouble for the administrator, there is a big IF it can succeed, reports Reuters. GlobeOp says it “totally disagrees with the allegations,” and will not take the role of fall guy lightly. “While it is easy to point fingers at third parties,” GlobeOp told Reuters, “investors typically liquidate based on fund performance results,” thus piercing Archeus’ assertion that its AUM dropped from $3 billion to $700 million because of the administrator’s faulty records. Harry Davis, HF attorney at the law firm Schulte Roth & Zabel, said in an interview with Reuters. “If you assume that in fact GlobeOp was grossly negligent or reckless and that caused the problems at Archeus,” he said, “it sounds like Archeus may well have a claim against GlobeOp...But it is really hard to prove that there is a sole reason that investors redeemed.” Meanwhile, industry observers are saying Archeus has to assume some responsibility and could have avoided its current problems had it not relied solely on its administrators and independently backed up its records.
