Legally Funded

Funding any entrepreneurial venture has become increasingly litigious and complicated, especially with the credit markets and banks tightening their lending policies since the Financial meltdown of 2008. Hedge funds and private equity firms have had to pick up some of the slack, where credit is dry, such firms look for opportunities to capitalize with favorable deals and the use of leverage. Leverage and high demands of return by investment firms has led to many more contracts becoming increasingly more specific and complex among Financiers, Business partners, project contractors, etc. Such complex agreements, along with the volatility and uncertainties throughout the investment industry is making for and even for difficult time when disputes reach the courtroom.
Many hedge funds and equity firms run things properly and ethically and do not create any problems within the industry. Some are powerful enough and have enough capital to create seismic shift throughout the markets. Some are just run by crooks and swindlers who feel they can do as they please with investor’s funds. Those few rotten funds, run by shady executive have brought quite a bit of attention and shame recently, whether it has been by defrauding longtime investors of their life savings in a ponzi scheme, inflating their books, offshore tax shelters, or downright not living up to their contracts or agreements.
A few of these cases provide examples of how you should and should not handle such legal situations. I feel in many cases, lawsuits can be avoided, obviously by being open and ethical, but if a lawsuit is threatened, you should do everything within your power to make sure it gets worked on outside of court to limit the negative press toward your firm or business. In the case of the Aramid Entertainment fund manager David Molner this has not worked. David Molner and one of his top Movie investors are now embroiled in a serious lawsuit which has been filed in both New York and L.A. because other investors are now concerned, with the funds value being depressed by hidden offshore accounts and shareholder suspicion which has limited the funds effectiveness to conduct normal business.
Another example of this, is the lawsuit between Shawn Carter (Jay-z) and Highland Capital management, a hedge fund out of Dallas, Texas. The firm secured a loan of around $52,000,000 dollars to buy and renovate a Boutique Hotel in the Chelsea district of New York. Highland Capital defaulted on the loan as they lost funds and could not live up to their bargain, effectively sabotaging Jay-z’s plans for the hotel, and the money already invested in to the project! Yes it is understandable if for outside factors that you default, however this company has a history of holding investors hostage and not delivering on contracted agreements.
All hedge funds need to operate more openly and ethically, by creating a comforting and straight forward environment for successful investing. Some firms have shown their inability to do this, and their complete disregard for the clients money they manage. If you want to have a successful investment company it is imperative that you conduct business in a manner that is productive and transparent, not secretive and shady.