A London arbitration tribunal has ruled that a subsidiary of Windsor’s SS&C Technologies Holdings is not liable for failing to discover and report a fraud perpetrated by one of its hedge-fund clients’ portfolio managers, SS&C said Tuesday.
Millennium Global Emerging Credit Master Fund Ltd., which was placed in liquidation after suffering heavy losses in the 2008 market collapse, had asked a United Kingdom arbitrator to order SS&C’s fund-services subsidiary GlobeOp to pay it at least $160 million plus interest.
The legal dispute began prior to SS&C acquiring GlobeOp in 2012 for nearly $900 million.
The hedge fund hired GlobeOp in 2006 as an independent valuation agent, charged with calculating the net value of its assets.
Millennium alleged that GlobeOp failed to catch Millennium portfolio manager Michael Balboa, who fraudulently inflated the value of sovereign debt holdings. GlobeOp relied on Balboa’s hand-picked outside brokers for advice on pricing those warrants, which were illiquid and virtually worthless, according to a 2011 lawsuit filed by the U.S. Securities & Exchange Commission against Balboa and one of his brokers.
Balboa was sentenced last year to four years in prison, according to Forbes.
