Senior executives at collapsed investment bank Babcock & Brown have been accused of misleading investors who put money into a failed scheme to buy $US386 million ($432 million) of railway cars in the US. In a writ lodged with the Victorian Supreme Court just before Christmas, Singapore-listed mutual fund Global Investments claims to have lost all the $US15 million it invested in Babcock & Brown Rail North America (BBRNA). Allegations against the executives include that they used ''unrealistic'' modelling and misled investors over a bridging loan obtained from another Babcock & Brown entity. Babcock & Brown executives named in the writ are Victoria McManus, who was head of the group's rail group until 2008, head of syndications George Stone, rail group head of finance and operations Ross Sullivan, rail president Larry Littlefield and US head of special products Richard Umbrecht.
The lawsuit is the second mounted in Victoria against Babcock & Brown in the past two months as lawyers scramble to file their paperwork before the six-year statute of limitations expires. In November, investors filed a lawsuit against Babcock & Brown and senior management, including former chief executive Phil Green, over a highly leveraged deal to buy US coin-laundry group Coinmach in 2007. The new lawsuit, filed on December 19, relates to a complex deal to buy 5482 rail cars that was settled on December 21, 2007. Global Investments told the Singapore Exchange it had also filed the same claim with the New York County Supreme Court. Both lawsuits had been lodged on a no-win, no-fee basis, Global Investments said
