'Overbroad' Ruling On Bayou Fund Transfers Reversed

Law360, New York (September 20, 2010, 6:11 PM EDT) -- A federal judge has reversed a bankruptcy court’s finding that investors who pulled out of Bayou Group LLC are not necessarily required to return all the funds they received as allegedly fraudulent transfers before the hedge fund was unmasked as a $450 million Ponzi scheme.

Judge Paul G. Gardephe of the U.S. District Court for the Southern District of New York on Friday decided that the investors are entitled to a trial on the “hotly contested” issue of whether they took the transfers in good faith....
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