Prime Broker Must Return Margin Payments

Law360, New York (March 20, 2007, 12:00 AM EDT) -- The United States Bankruptcy Court for the Southern District of New York (Bankruptcy Court) recently issued a significant decision for securities firms and, in particular, for prime brokers. See Gredd v. Bear, Stearns Secs. Corp. (In re Manhattan Inv. Fund Ltd.), __ B.R. __, Adv. Pro. No. 01-2606, 2007 WL 60843 (Bankr. S.D.N.Y. Jan. 9, 2007).

In that decision, the bankruptcy court held Bear, Stearns Securities Corp. liable to return, to the bankruptcy estate of a hedge fund that had engaged in a ponzi scheme, more...
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