Please Note: You are viewing the unstyled version of Subprimelosses. Either your browser does not support CSS (Cascading Style Sheets) or it is disabled. As a result, much of this website will not look the way it was intended, although all of its contents will be accessible to you. For more information, visit our Browser Support page.

Skip to Primary Site Navigation, Secondary Site Navigation, Content

Home > Cases > Blue River Asset Management Overview

Blue River Asset Management

Hedge Fund Shake-Up At Blue River Asset Management

The hedge fund industry continues to endure one of the worst-performing years in recent memory, with dozens of funds forced to suspend investor withdrawals or close down entirely. The latest hedge fund firm to weather tough times: Colorado-based Blue River Asset Management LLC.

Troubles at Blue River concern its main bond fund, which specialized in tax-free municipal bonds and used investors' money to pledge their securities to various lenders. Lenders then provided additional financing to put into bonds and other investments. At one time, the fund reportedly had more than $1 billion in assets.

In the past year, however, losses in subprime mortgages and turmoil from the ongoing credit crunch have taken a heavy toll on municipal bond funds - once considered the safest investment next to Treasury notes.

In February, when municipal bond prices began to plummet, Blue River was forced to meet the margin calls of its lenders. Facing potential collapse, Blue River turned to JPMorgan Chase, which threw the firm a financial lifeline by helping to raise $110 million from new and existing investors.

That was in early March. By March 11, things didn't look quite so rosy. After nearly 80% losses, news reports began circulating that Blue River was planning to liquidate its main fund, returning what was left of the capital to investors.

The money raised by JPMorgan apparently will be put to use for a new domestic fund in order to keep Blue River in business.

Blue River's hedge funds troubles are far from over, however. In late March, several investors sued Blue River, claiming it invested money without their approval and then failed to return money when they asked for it back.

Our affiliation of securities lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.


Return to Cases >


Top