'Unprecedented' [Legal] Advertisement

Absolute Investors Respond To 'Unprecedented' [Legal] Advertisement [¹]
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[ Normxxx Here:  And then came the deluge of lawsuits!!! We really won't know, for example, how much trash is in the 'supposedly no-loss' money market funds until they 'own up'!  ]

By William Hutchings | 13 October 2007

Investors in funds run by Absolute Capital Management, a UK-quoted fund manager whose share price fell 80% when its founder Florian Homm abruptly resigned, have responded strongly to what is thought to be the UK's first advertisement asking them to contact an action group. William Rodger, a partner at UK law firm Simmons & Simmons retained by the Absolute Investors Action Group, a group of investors in Absolute Capital's funds, said the advertisement in UK national press today was necessary to alert investors to the existence of the action group.

He said: "We were not following a precedent when we drew up the advert. We had investors who wanted to get in touch with other investors. There is no public register in the Cayman Islands, where the funds are registered, so an advert seemed a way to do it."

The tactic has worked since the advertisement was placed yesterday, he said: "The response has been very busy indeed. There is a high degree of investor concern about the firm's line of 'accept these proposals or we will liquidate the funds'."

The investor action group wants Absolute Capital to look at appointing another manager to run the funds. Absolute Capital has been in trouble since Homm, who co-founded the firm and acted as co-chief investment officer and a fund manager, used a press release early last month to tell the firm's directors and the general public that he had resigned. He said he was going on holiday and his whereabouts are not known.

Soon after his departure, Absolute Capital found some of its funds had significant exposures to illiquid US public companies, contradicting investors' expectations. [[Presumably based on literature put out by the fund: normxxx]] The firm closed the funds to redemptions and proposed to separate out the illiquid holdings, to wind down slowly this part of portfolios, and continue to run the remainder of the portfolios. It said it would do this if less than a third of investors opposed it, or put the funds into administration.

  M O R E. . .

Normxxx    
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