http://www.businessspectator.com.au/bs.nsf/Article/Investors-to-s...

http://www.businessspectator.com.au/bs.nsf/Article/Investors-to-sue-Everest-hedge-fund-BYCPU?OpenDocument&src=edbyo&ir=3

AAP

Former Babcock and Brown-backed hedge fund Everest Financial Group is being sued by two Sydney businessmen for what they say is a breach of guarantee and misleading and deceptive conduct in relation to two investment schemes in which they invested $5 million.

Brothers Bernard Stang and Maurie Stang say that Everest Capital and two of its directors, Jeremy Reid and Steven Eckowitz, had induced them to invest in the schemes with performance guarantees of up to 6.75 per cent a year.

The two are being represented by listed legal firm Slater and Gordon.

A statement of claim relating to the case was filed in the Federal Court of Australia in Sydney this week.

Slater and Gordon said the brothers claim they were also given a commitment by Mr Reid and Mr Eckowitz that they would not redeem their own investments without providing notice to Bernard and Maurie Stang beforehand.

Slater and Gordon Group Practice leader Van Moulis said Bernard and Maurie Stang had been given guarantees about the performance of two Everest-managed investment schemes, which at every turn failed to materialise.

"Despite the performance guarantees made to Bernard and Maurie, in late 2008 the investments in the two Everest managed investments schemes were frozen, and remain frozen preventing them from reinvesting their investment elsewhere to recover the losses on the investments," Mr Moulis said in a statement.

He said this occurred after Mr Reid and Mr Eckowitz redeemed their own investments in the schemes in February 2008 and despite the guarantee given to the Stang brothers that neither Mr Reid nor Mr Eckowitz would redeem their own investments in the schemes without informing the brothers first.

The statement said the brothers also claim that Mr Reid and Mr Eckowitz had failed to deliver on verbal and written guarantees that their investments would be highly diversified and managed to the highest standards of corporate governance.