Anglo American Security Fund v. S.R. Global International Fund
Delaware Court of Chancery
829 A.2d 143 (2003)
Facts
S.R. Global International Fund, L.P. (fund) (defendant) was a hedge fund created for the sole purpose of maximizing profits for Anglo American Security Fund, L.P. and the fund’s other limited partners (investors) (plaintiffs). The partnership agreement gave the fund’s general partner, Sloane Robinson Investment (Cayman), Ltd. (Sloane) (defendant), total control over the fund’s affairs. The agreement entitled the investors to receive only routine financial reports and effectively forced the investors to wait six weeks before closing or transferring their fund accounts. The fund’s 1999 financial report failed to disclose Sloane’s improper withdrawal of over $22 million from the fund, which significantly diminished the fund’s value and the value of each investor’s fund account. When the nondisclosure came to light, the investors closed their accounts and sued Sloane in the Delaware Court of Chancery for negligence and breach of fiduciary duty. Sloane moved to dismiss the suit on the grounds that Delaware law gave only current limited partners the rights to bring a derivative action for wrongdoing against a partnership.
Rule of Law
Issue
Holding and Reasoning (Chandler, J.)
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