California Court of Appeal

In an action brought by plaintiff-successor trustee of two family trusts that invested in the RAM hedge fund, which was then devastated by the stock market crash in 2008, judgment in favor of plaintiff against defendants RAM Fund, Rockwater Municipal Advisors (RMA), which managed the fund, Williams (the founder and CEO), and Hapke (the CFO), and in favor of defendants Charles Fish Investments, Inc. (CFI) and its CEO, Fish, who invested in the RAM Fund and exercised an option to unwind the transaction after the crash, is: 1) reversed in part as to the judgment against RMA and Williams for actual and constructive fraudulent transfer, where there is no substantial evidence to show that RMA and Williams made a fraudulent transfer within the meaning of the Uniform Fraudulent Transfer Act in returning CFI's assets upon unwinding; 2) reversed in part as to the judgment against RMA and Hapke for fraud, where even if they had made any material misrepresentations or omissions, and even if the initial trustee of the trusts had relied thereon, any such reliance would have been unreasonable; 3) reversed in part as to the judgment against defendants RAM Fund and Hapke for breach of fiduciary duty and professional negligence, because there is no substantial evidence to show that they were investment advisers within the meaning of Corporations Code section 25009; 4) affirmed in part as to the judgment against RMA and Williams on those causes of action because there is substantial evidence to show that they were investment advisers and that they breached their fiduciary duties to the initial trustee; and 5) affirmed in part as to all causes of action found in favor of defendants CFI and Fish, and as to the finding that defendant CFI was not the alter ego of RMA, and thus, was not liable for the debts of RMA.

Appellate Information

• Decided 06/19/2014
• Published 06/19/2014

Judges

• MOORE

Court

• California Court of Appeal

Counsel