Hatteras Investment Partners Funds faced major losses in 2021. The company sold its assets to The Beneficient Company, causing investors to lose 95% of their money. This sale led to lawsuits and claims of wrongdoing.
Hatteras, founded in 2003 in Raleigh, North Carolina, once managed $1.5 billion. By 2021, that amount dropped to $400 million. The Beneficient Company’s ties to GWG, which went bankrupt in 2022, made things worse for investors.
A class action lawsuit filed on April 17, 2024, claims Hatteras directors didn’t tell investors about the sale or let them vote on it. The lawsuit names Hatteras CEO David B. Perkins and other directors as defendants.
Investors Dr. Richard Steven Smith and John David Milley III say they lost almost all their money in Hatteras funds. After merging with Avalon Acquisition Inc., Beneficient’s stock price fell from $8 to about $0.08 per share.
This drop added to investor losses. Haselkorn & Thibaut is now looking into these Hatteras Investment Partners Funds losses. The story gets more complex.
Key Takeaways
Table of Contents
- Hatteras Investment Partners sold its funds to The Beneficient Company in 2021, leading to losses of up to 95% for some investors.
- A class action lawsuit was filed on April 17, 2024 against Hatteras directors, claiming they failed their duty to investors.
- Hatteras’ assets under management dropped from $1.5 billion in 2014 to about $400 million by 2021.
- After merging with Avalon Acquisition Inc. in June 2023, Beneficient’s stock price fell from $8 to about $0.08 per share.
- Haselkorn & Thibaut offers free consultations at 1-888-885-7162 for investors who lost money in Hatteras funds.
Background of Hatteras Investment Partners
Hatteras Investment Partners started as a fund manager in 2003. They offered various investment options, including hedge funds and private equity funds.
Founding and offerings
Hatteras Investment Partners started in 2003 in Raleigh, North Carolina. The firm focused on closed-end funds for investors. These funds included the Core Alternatives TEI Fund, Core Alternatives Fund, Core Alternatives TEI Institutional Fund, and Institutional Fund.
Hatteras offered a range of investment options to meet diverse client needs.
The company aimed to give clients access to different types of investments. Their funds allowed people to put money into various assets. This strategy helped spread risk across multiple areas.
Assets under management (AUM) history
Hatteras Investment Partners once held a strong position in the market. In 2014, the firm boasted $1.5 billion in assets under management. This figure showed the trust investors placed in Hatteras’ investment strategies and financial products.
Sadly, Hatteras’ AUM took a sharp dive over the next seven years. By 2021, their assets had shrunk to about $400 million. This steep drop raised red flags about the firm’s performance and investor confidence.
To help older clients cash out, Hatteras offered quarterly tender offers. These allowed retirees to sell their stakes more often than usual.
Allegations and Lawsuits
Hatteras Investment Partners faces serious legal troubles. Investors have filed lawsuits against the company and its directors for alleged wrongdoing.
Connection with The Beneficient Company and GWG
Hatteras Investment Partners LP sold its funds to The Beneficient Company in 2021. This move linked Hatteras to GWG Holdings, a firm tied to Beneficient. GWG filed for Chapter 11 bankruptcy in 2022, causing huge losses for its investors.
The sale of Hatteras funds to Beneficient raised concerns about investor safety. GWG’s bankruptcy highlighted the risks of these connections. Investors in Hatteras funds now face potential losses due to these complex business ties.
Lawsuit against Beneficient Officers and/or Directors
A lawsuit has been filed against Beneficient officers and directors. This legal action stems from alleged misconduct and fraud linked to Hatteras Investment Partners funds. The suit claims that Beneficient’s leaders failed to uphold their fiduciary duty to investors.
It also points to possible violations of securities laws in their dealings with Hatteras and GWG.
The case highlights serious concerns about the management of investor funds. Plaintiffs argue that Beneficient’s actions led to major losses for those who put money into Hatteras products.
The lawsuit seeks damages and aims to hold company leaders accountable for their choices. As the case moves forward, it may shed light on the complex ties between Beneficient, Hatteras, and GWG.
Class action lawsuit against Hatteras directors
Investors hit Hatteras directors with a class action lawsuit on April 17, 2024. The case, filed in Delaware’s Court of Chancery, claims the directors failed their duty to investors.
Richard Steven Smith and John David Milley III lead the charge. They say they lost almost all their money due to the directors’ actions.
The lawsuit names five Hatteras bigwigs as defendants. David B. Perkins, Gregory S. Sellers, Steve E. Moss, Thomas Mann, and H. Alexander Holmes face serious claims. The investors argue these directors didn’t do their job right.
This lack of care, they say, led to major losses for many people who trusted Hatteras with their cash. Next, we’ll look at the events that caused these big losses.
Events Leading to Losses
Hatteras funds faced major losses after swapping interests with Beneficient. This move led to a liquidation plan and a merger with Avalon Acquisition Inc., hurting investors.
Exchange of interests with Beneficient
Hatteras Master Fund, L.P. made a big move on December 7, 2021. They swapped their interests for Beneficient Preferred Series B-2 Unit Accounts. This exchange marked a key shift in Hatteras’ investment strategy.
The fund also signed a Registration Rights Agreement with Beneficient Company Group, L.P.
This deal linked Hatteras more closely to Beneficient’s financial products. It changed how Hatteras managed its assets and risks. The impact of this exchange on investors remained unclear at first.
Many wondered if this new tie would help or hurt their investments in the long run.
Approval of liquidation plan
In December 2021, the Hatteras Board of Directors made a big choice. They approved a plan to close down their funds. This plan swapped $400 million of investments for preferred shares in Beneficient.
The move aimed to give investors a way out, but it came with risks.
The liquidation plan marked a major shift for Hatteras funds. It changed how much money investors could get back. The swap for Beneficient shares tied the funds’ value to a new company.
This decision sparked concerns about due diligence and investor protection.
Merger with Avalon Acquisition Inc.
Beneficient merged with Avalon Acquisition Inc. in June 2023. This deal made Beneficient a public company. The merger valued Beneficient at $3.5 billion at first. As part of this deal, Hatteras’ preferred shares changed to Beneficient Class A common stock.
The new stock price was set at $8 per share.
But things didn’t go as planned. After the merger, Beneficient’s stock price dropped sharply. It fell from $8 to about $0.08 per share. This big drop hurt many investors who held Hatteras funds.
The merger, meant to boost value, ended up causing major losses instead.
Investor Impact
Investors in Hatteras funds faced big losses due to poor choices by fund directors. Want to know more about this financial mess? Keep reading.
Significant losses for investors
Hatteras Investment Partners’ investors faced huge losses. They lost 95% of their money in the fund. This drop came after a series of events tied to The Beneficient Company and GWG.
The fund’s value plummeted, leaving many in financial trouble.
Beneficient’s stock price fell to about $0.08 per share. This crash wiped out most of the remaining value for Hatteras investors. Such steep losses often lead to lawsuits and calls for closer looks at investment practices.
Investors may seek help from legal experts to explore their options for recovery.
Failure of due diligence by Hatteras directors
Hatteras directors failed to do their homework. They didn’t check Beneficient’s founder Brad Heppner well enough. This slip-up led to big problems. The SEC started looking into Heppner’s bad actions.
Investors lost money because of these mistakes.
The directors admitted they messed up. They should have looked closer at Beneficient before making deals. Their lack of care hurt many people who trusted them with their cash. This shows how important it is for investment firms to be careful with other people’s money.
Legal Action and Support
Haselkorn & Thibaut offers free consultations for investors who lost money in Hatteras funds. Want to know more? Keep reading.
Haselkorn & Thibaut investigation and expertise
Haselkorn & Thibaut leads the charge in probing claims for Hatteras stockholders. This firm boasts deep know-how in tackling securities and investment fraud cases. Their team of experts digs into complex financial matters to uncover the truth.
They aim to protect investors who may have suffered losses due to misconduct.
Clients don’t pay unless the firm wins their case. This approach, called a contingent fee basis, allows more people to seek justice. Haselkorn & Thibaut’s track record shows their skill in handling tricky investment disputes.
They offer free talks to those who think they might have a claim.
Contact information for free consultation
Investors who lost money in Hatteras Investment Partners funds can get free help. Haselkorn & Thibaut offers no-cost consultations about your case. They know a lot about investment problems and can guide you.
You can reach them at 1-888-885-7162 to set up a meeting. This firm has dealt with many cases like yours before.
Free advice is just a phone call away for those affected by Hatteras fund losses. The experts at Haselkorn & Thibaut stand ready to discuss your options. They have deep knowledge of financial industry rules and investor rights.
Don’t wait to seek help if you’ve lost money. Pick up the phone and dial 1-888-885-7162 for a free chat about your situation.
Conclusion
Hatteras Investment Partners’ funds have left many investors with huge losses. Legal action is now underway to help those affected. Haselkorn & Thibaut offers free consultations for investors seeking answers.
Their team has deep knowledge in handling such cases. Investors should act fast to protect their rights and explore options. Time limits may apply for filing claims. Don’t face this alone – reach out to experts who can guide you through the process.
FAQs
1. What are Hatteras Investment Partners Funds?
Hatteras Investment Partners Funds are alternative investments that include the Hatteras Core Alternatives Fund and Hatteras Institutional Fund. These funds use strategies like private equity investments and short sales.
2. How did the Global Financial Crisis (GFC) affect these funds?
The GFC impacted many investment products, including Hatteras funds. This event led to changes in valuation methods and increased scrutiny of speculative investment strategies in capital markets.
3. Are there any legal actions related to Hatteras funds?
Yes, there are ongoing investor loss investigations and potential class action litigation. Some investors may seek remedies through FINRA securities arbitrations or other legal channels.
4. What risks are associated with investing in Hatteras funds?
Risks include market volatility, leverage, and lack of diversification. These funds may use speculative investment strategies that can lead to significant financial risk.
5. How are financial advisors involved with Hatteras funds?
Investment advisors may recommend Hatteras funds to clients. However, this advice should consider the client’s risk tolerance and financial goals. Unauthorized transactions or broker misconduct can occur.
6. What regulatory bodies oversee Hatteras funds?
The Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) oversee these funds. They may investigate potential securities fraud or conflicts of interest.
