Third Avenue Fund Faces $500M Investor Suit After Freeze

By Kurt Orzeck (January 15, 2016, 11:09 PM EST) -- Third Avenue Management Co. LLC and its founder were hit with a $500 million shareholder lawsuit Friday that charges they breached their fiduciary duties with a $790 million junk-bond fund that recently froze redemptions.

Third Avenue Focused Credit Fund investor William Engel accuses the firm, founder Martin Whitman and other executives of failing to maintain enough liquidity for the fund to stay operational after investors lodged numerous redemption requests. The U.S. Securities and Exchange Commission is currently investigating the freeze.

The fund's investment adviser, Third Avenue Management, sent a letter to investors in early December saying the fund's board of trustees...

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