Houston law firm Ahmad, Zavitsanos & Anaipakos have earned a significant court ruling that helps lift a veil of secrecy that has allowed hedge funds to avoid disclosing the identities of their investors. In its August 12 ruling, the Delaware Supreme Court rejected the idea that federal law keeps investors who suffered hedge fund losses from learning who else might be interested in joining an investigation or a lawsuit against fund managers or third parties like auditors. 

The ruling from Delaware’s highest civil court stems from a case involving Brown Investment Management, L.P., a limited partner that invested in Plano, Texas-based hedge fund, Parkcentral Global. In less than 90 days, Brown Investment Management lost all of its investment in the hedge fund. Parkcentral Global is now a liquidated hedge fund run by affiliates of billionaire and former presidential candidate H. Ross Perot. Court documents show Parkcentral Global’s loses at approximately $2.6 billion. 

“Hedge funds exploded in the last decade because pooled investments provide a largely unregulated way for hedge fund managers to make money for themselves. This ruling helps those who lost money in poorly-managed funds to find other investors and join together to take legal action,” says attorney Amir H. Alavi, with Ahmad, Zavitsanos & Anaipakos who tried the case for Brown Investment Management. “Hedge funds where managers lacked diligence and proper risk analysis can no longer use divide-and-conquer tactics to avoid responsibility for losses.”