DALLAS (CN) - A federal judge refused to certify a class of investors fighting Ross Perot's company over its role in the $2.5 billion Parkcentral Global hedge fund collapse.
Founded in 2002, Parkcentral Global purportedly gave outside investors access to the Perot family's money management team and proprietary trading strategies.
The hedge fund was wiped out when AAA-rated positions in the CMBS market were devalued by 10 percent during the 2008 financial crisis.
Levine Capital Ltd. and Southern Avenue Partners LP claimed
in a 2009 lawsuit that Plano-based Perot Investments and its employees, Steven Blasnik and Peter Karmin, misled Parkcentral Global's limited partners.
Instead of hedging its positions as represented, Parkcentral Global pursued a highly leveraged, open-long position in AAA-rated commercial mortgage-backed securities, the complaint alleged.
U.S. District Judge Barbara M.G. Lynn later dismissed the majority of the investors' claims in July 2012, but allowed claims the officers breached their fiduciary duties by misrepresentation and/or non-disclosure.
In an Aug. 25 order unsealed Tuesday, Lynn denied a motion for class certification.
"The court concludes that this case raises pervasive individual questions pertaining to the content of information received, reliance, and damages, such that class treatment would be inappropriate," the 26-page opinion states.
With evidence showing "significant differences in the amount and substance" of information given to the limited partners, Lynn said "individualized questions" over the receipt of false or misleading information will "predominate over common questions."
"The differing views of limited partners, including on whether they found AAA CMBS positions appealing, suggest that reliance cannot be presumed for the putative class as a whole," Lynn added. "Because of the different investor views as to the advisability of Parkcentral's trading strategy, it is speculative to assume that the investors would have taken a uniform course of action had they had different information, and accordingly, the extent to which they relied on defendants' communications in deciding not to redeem is one that requires individual analysis. Because there are individualized issues as to what information different limited partners received, and the extent to which they relied on such information, common issues do not predominate."
Perot Investments did not immediately respond to a request for comment Tuesday evening.