High Stakes Civil Litigation: BB&T's Hedge Fund Lawsuit

Courtroom View Network is the "leading provider of live and on-demand video for high stakes civil litigation."  CVN was in North Carolina providing that video coverage for the hearing on a Motion to Dismiss in BB&T's lawsuit regarding a $55 million hedge fund investment turned sour. That's certainly a "high stakes" matter.

The videos from CVN are part of a subscription service, but the company has graciously provided me with two clips of the hearing before Judge Diaz, which you can view below. 

Before you do that, a little background. The case is BB&T BOLI Plan Trust v. Massachusetts Mutual Life Insurance Co. BB&T invested in a Citigroup hedge fund, Falcon Strategies, LLC. The investment was made in connection with BB&T's purchase of bank owned life insurance (BOLI) through Defendants MassMutual and Clark Consulting, Inc.

BB&T paid a $112 million premium to MassMutual for the BOLI. About $55 million was placed in the Falcon hedge fund. The hedge fund's performance, according to BB&T, was so poor that it triggered BB&T's right to reallocate that investment. 

BB&T claims that MassMutual and Defendant Clark nevertheless falsely advised them that no "reallocation event" had occurred, resulting in a significant loss.  The first video clip shows BB&T's lawyer arguing the claimed false statement by the Defendants.

The Amended Complaint doesn't specify the amount of BB&T's loss, but Falcon is reported to have lost more than 80% of its value. That would mean BB&T lost $44 million on this investment.

Other banks had far more substantial losses in Falcon than BB&T. The bank formerly known as Wachovia lost $315 million.  Fifth Third Bank had $612 million invested in Falcon, and has sued over its losses in federal court in Ohio.

Another issue before Judge Diaz at the hearing was whether discovery should be stayed pending resolution of the Motion to Dismiss. The second clip shows Winston-Salem attorney Mike Robinson arguing in favor of the stay.  Judge Diaz granted that motion in a short order the following day. He hasn't ruled yet on the Motion to Dismiss.

MassMutual's Brief In Support Of Motion To Dismiss

BB&T Response

MassMutual's Reply Brief

Clark Consulting's Brief In  Support Of Motion To Dismiss

BB&T Response

Clark Consulting's Reply Brief

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