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Kenneth Lipper, the money manager who lost millions running a hedge fund for the rich and famous, may have been looking out for himself, his family, and at least one friend at others' expense. This allegation is made in a lawsuit filed on Jan. 3 in a federal court in South Carolina by the blind trust of Senator Ernest "Fritz" Hollings (D-S.C.).
Lipper announced in February, 2002, that Lipper Convertibles had lost 40%, or $315 million, of its value. The complaint states: "Remarkably, in January, 2002, prior to Lipper's February announcement, Ken Lipper, through Lipper Holdings, had already withdrawn $3.15 million from his own capital account."
Lipper's pal Mortimer Zuckerman, chairman and editor-in-chief of U.S. News & World Report, allegedly withdrew $12 million in January, 2002, according to the lawsuit, which claims: "Lipper was obviously looking out for his friends." And, it charges, Lipper's four daughters made a withdrawal of about $300,000 each in November, 2001, and one took out an additional $270,000 the following month. At the time, Lipper daughter Daniella Lipper Coules worked for her father as a research analyst.
Speaking for Lipper, company exec Abe Biderman says the suit has no merit. The $3.15 million, he says, was withdrawn in anticipation of earning yearend income and was later repaid. Biderman doesn't deny the daughters took out money but says other Lippers added funds. Zuckerman says all decisions were made by his financial adviser. As BusinessWeek reported in a Dec. 9 cover story, "The Fallen Financier", Lipper & Co. was forced to liquidate its funds. The Securities & Exchange Commission and other regulators are still investigating.
By Marcia Vickers in New York
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Copyright 2003, by The McGraw-Hill Companies Inc. All rights reserved.
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