KBW Shorted Clients' Shares, Hastened Failure: Suit

Law360, New York (August 22, 2011, 8:53 PM EDT) -- Financial adviser Keefe Bruyette & Woods Inc. was sued Monday in Texas for allegedly breaching a contract and illegally using nonpublic information when it shorted shares of clients Guaranty Financial Group Inc. and Guaranty Bank, contributing to their demise.

Kenneth L. Tepper, liquidation trustee for the Guaranty Liquidation Trust, claims KBW violated confidentiality agreements when it used material information to short 180,000 GFG shares at a time when it should have been helping the struggling company raise capital.

“KBW's disregard of its contractual obligations and illegal...
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