F&C rejects hedge manager's bullying claims - report

F&C Asset Management has rejected accusations of bullying in a high court battle over a hedge fund joint venture hit hard during the credit crisis.

The group has gone to court after hedge fund managers Francois Barthelemy and Anthony Culligan tried to force the FTSE 250-listed firm to buy them out of a limited liability partnership (LLP) set up before the credit crisis, Reuters reports.

"It's very clear in my mind that F&C have tried to bully me," said Barthelemy, under questioning by an F&C lawyer.

An F&C spokesman responded: "This is a baseless assertion with no factual evidence to support it."

"Attempting mediation is simply best practice and a route encouraged by the courts," the spokesman said, referring to attempts to secure a settlement.

Barthelemy and Culligan say F&C was content to let the LLP, called F&C Partners, to wind down after it made big losses in the 2008 market meltdown, to avoid having to buy them out. F&C denies the claim.

F&C, which owns 60% of the partnership, is trying to stop the pair exercising a put option that would force F&C to acquire their combined 40% stake.

According to lawyers for Barthelemy and Culligan, F&C could be forced to pay up to £40m pounds if a ruling goes against it, Reuters added.

F&C, which is in the process of securing a deal to buy Thames River, made an underlying profit after tax of £28m in 2009. The group's latest annual report shows the case had cost the firm £4.1 million pounds by the end of 2009, long before it came to court in mid-June.

The main funds run by the LLP were the F&C Balanced Alpha fund, which was down 22% in 2008 in dollar terms, and the F&C Select Alpha fund, which was down 44%.

The idea that an absolute return product never... loses value is absurd," Barthelemy said at Royal Courts of Justice complex on Fleet Street.

"Hedge funds are supposed to make money, even if markets perform poorly, over a period of time."

Barthelemy and Culligan allege F&C made cuts which undermined the business, including making redundant a marketing officer for the LLP's products. They claim F&C breached the LLP accord, entitling them to exercise the put options and to claim damages for the loss to the LLP caused by F&C's conduct.

F&C argues the exercise of the put options was invalid. It has rejected the allegation there was a secret decision or strategy to close down the LLP.