Bloomberg News

Rubicon Hedge Fund Sues Ex-Traders at ‘War’ to Control Firm

May 21, 2012

Rubicon Fund Management LLP said two former traders tried to overthrow the hedge fund’s management after its founder was badly injured in a horse-riding accident, according to a U.K. lawsuit.

Rubicon is seeking as much as 105 million pounds ($166 million) from Timothy Attias and Santiago Alarco, who had been interim co-chief investment officers before leaving to set up their own company in 2011. Their conduct and subsequent departure led investors to take more than $1 billion out of Rubicon’s master fund, the company said.

Attias and Alarco temporarily took control of Rubicon’s master fund after Rubicon founder and Chief Executive Officer Paul Brewer fell from a horse in August 2009, the company’s lawyer Paul Downes said yesterday on the first day of trial in London. Attias was “incandescent with rage” when he realized Brewer would return to work instead of selling his stake to the pair, as they had discussed.

“We’re at total war with these guys,” Attias told Alarco, according to a phone call described in court documents. Attias wrote in an e-mail to Alarco: “Nothing will drive these idiots out quicker than if they feel everyone around them has lost respect for them.”

Attias and Alarco founded SATA Asset Management Ltd. and SATA Partners LLP in 2011.

Taking Clients

They are accused of soliciting Rubicon’s clients, leading the fund’s largest investor to withdraw its money. Catherine Cripps, who previously worked for Zurich-based GAM Holding AG (GAM), and Robert Blaxland, Rubicon’s former head of investor relations, are also named as defendants in the suit. GAM was one of Rubicon’s biggest investors in 2010, Downes said.

On March 1, 2011, around the time Attias was negotiating his departure, Rubicon “suffered catastrophic redemptions of approximately $486 million,” including $295.9 million from GAM, according to court documents.

As a result of Attias and Alarco’s actions, Rubicon said its assets under management fell from $1.6 billion at the end of December 2010 to about $290 million in July 2011, before recovering to $427 million by the end of that year. The losses “set Rubicon back by about four years.”

BlackRock, Societe Generale

Potential investors in SATA in 2011 included GAM, BlackRock Inc. (BLK:US) and Societe Generale (GLE) SA, according to a list compiled by Cripps, lawyers for Rubicon said in documents prepared for trial. Alarco and Attias met with Soros Fund Management LLC and Goldman Sachs Group Inc. (GS:US) to discuss seed money for the new fund, Rubicon said.

Larissa Alghisi, a spokeswoman for GAM said the company wouldn’t comment because it isn’t involved in the trial.

Court filings by Rubicon show the dispute escalated into a personal fight. Attias and Alarco secretly listened in on a 2010 phone-call in which Brewer, discussing his return, told a colleague: “Revenge is a dish best served cold.”

Attias and the other defendants are scheduled to begin their defense tomorrow. Alan Watts, a lawyer representing Attias and Alarco, didn’t immediately respond to an e-mail asking for comment.

The case is: Rubicon Fund Management LLP v. Timothy Levy Attias, High Court of Justice, Chancery Division, HC11C02751.

To contact the reporter on this story: Kit Chellel in London at cchellel@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net


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