Beneficient is tied to GWG, which declared bankruptcy in 2022 after suffering catastrophic losses for investors. A recent lawsuit against certain Beneficient Officers and/or Directors has revealed substantial allegations of misconduct and fraud throughout the companies.
According to Hatteras SEC filings, on December 7, 2021, the Hatteras Master Fund, L.P. exchanged interests in the Adviser Funds for Beneficient Preferred Series B-2 Unit Accounts and entered into a Registration Rights Agreement with the Beneficient Company Group, L.P.
If you invested in Hatteras Investment Partners Funds and have questions about your legal rights, or if you have information relevant to this matter, contact Silver Law Group for a no-cost consultation at 800-975-4353 to discuss your potential options.
A class action has already been filed, and the complaint, filed in Delaware’s Court of Chancery on April 17, 2024, alleges that Hatteras’ directors breached their fiduciary duty when they sold their funds to Beneficient without telling investors, allowing them to vote on the deal, or giving them an opportunity to redeem their investments before the transaction went through.
The defendants in the case are David B. Perkins, CEO of Hatteras, and audit committee members and directors Gregory S. Sellers, Steve E. Moss, Thomas Mann, and H. Alexander Holmes.
The case was filed by plaintiffs Dr. Richard Steven Smith and John David Milley III, who “lost essentially their entire investments in the Hatteras funds as a result of defendants’ actions,” according to the complaint.
Hatteras Investment Partners Funds And Beneficient
Hatteras is a Raleigh, North Carolina-based investment adviser that was founded in 2003 and offered closed-end funds such as:
- Hatteras Core Alternatives TEI Fund
- Hatteras Core Alternatives Fund
- Hatteras Core Alternatives TEI Institutional Fund
- Hatteras Institutional Fund.
In 2014 Hatteras funds had $1.5 billion assets under management (AUM). Hatteras allowed investors quarterly tender offers due to the retirement of many investors. The funds performed well but, due to tender offer events, by 2021 AUM had dwindled to around $400 million.
The complaint alleges that Hatteras’ board “had grown weary of managing the funds and were looking for a way to wind down the Hatteras Funds as quickly as possible.”
In December, 2021 the Board of Directors of Hatteras approved a liquidation plan that involved exchanging the $400 million of investments in their funds for an equal amount of Beneficient preferred shares.
At the time the liquidation plan was approved, Beneficient preferred shares were valued at $10 per share. Hatteras’ board believed Beneficient would hold an initial public offering (IPO), but it went public in June 2023 by merging with Avalon Acquisition Inc, a SPAC (special purpose acquisition company).
The complaint states that Hatteras’ board was opposed to the merger but had no say since it waived its rights in the 2021 deal.
At the time, the SPAC merger was expected to be worth $3.5 billion, and converted Hatteras’ preferred shares to $8 per share Beneficient Class A common stock. Beneficient stock went on to fall to about $0.08 per share, leaving investors with a near-total loss.
Hatteras directors have admitted that they failed to perform adequate due diligence into Beneficient and find misconduct by its founder Brad Heppner that had caused the SEC to investigate the company.
Contact Us To Discuss Recovering Hatteras Funds Investment Losses?
Silver Law Group is a nationally-recognized class action law firm. If you have losses from investing in Hatteras Funds, contact us today at (800) 975-4345 to learn about your legal rights.
Our firm represents investors in securities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses. Most cases are handled on a contingent fee basis, meaning that you won’t owe us until we recover your money for you.