In addition to Bill Ackman, fund manager Ruane Cunniff & Goldfarb Inc. also lost billions and now faces lawsuit
When Valeant Pharmaceuticals International Inc.’s stock tumbled 51 percent on Tuesday, nobody lost more than fund manager Ruane Cunniff & Goldfarb Inc., which saw $1.26 billion in value wiped out in a day. But the week’s Valeant-related troubles don’t end there for the parent company of the Sequoia Fund.
On Monday, a retiree whose money was managed by Ruane Cunniff filed a lawsuit accusing the firm of conflict of interest, self-dealing and breach of trust. Those sins, the retiree alleged in a proposed group suit, fueled an environment that gave short shrift to participants of a retirement plan for employees of a company called DST Systems Inc.
The suit is the latest blow for Ruane Cunniff, a storied investment house started more than four decades ago by friends of billionaire investor Warren Buffett. Ruane Cunniff, whose Sequoia fund had one of the fund industry’s best long-term records, manages about $14 billion of assets in publicly listed securities, according to Bloomberg data.
Ruane Cunniff “pursued an exceptionally imprudent investment strategy with respect to a significant portion of the plan’s assets,” resulting in more than $100 million in losses, according to the complaint, which was filed before Valeant’s 51 percent one-day decline. They ran the retirement fund as a virtual clone of the Sequoia fund, the plaintiffs allege, adding that the managers “selected and retained high-cost and poor-performing investments.”
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