State of New York v. Canary Capital Partners, LLC

No. 402830/03 (2003)

From our private database of 46,400+ case briefs, written and edited by humans—never with AI.

State of New York v. Canary Capital Partners, LLC

New York Supreme Court
No. 402830/03 (2003)

  • Written by Tanya Munson, JD

Facts

Canary Capital Partners, LLC (Canary) (defendant) was a hedge-fund company that engaged in trading with mutual-fund management companies. From 2000 to 2003, Canary engaged in a scheme of late trading of mutual-fund shares on a daily basis. Canary targeted dozens of mutual funds and extracted tens of millions of dollars from them. By late trading, Canary deprived long-term buy-and-hold investors in the mutual fund. During the declining market of 2001 and 2002, Canary used late trading to effectively sell mutual funds short, causing mutual funds to overpay for their shares as the market went down and magnifying long-term investors’ losses. During the same period of 2000 to 2003, Canary entered into agreements to engage in market timing with dozens of mutual-fund families, allowing it to time many different mutual funds. Sometimes the fund manager would waive applicable early-redemption fees and directly deprive the fund of money that would have partially reimbursed the fund for the impact of timing. Such arrangements were never disclosed to mutual-fund investors. Many of the relevant mutual-fund prospectuses contained materially misleading statements assuring investors that the fund managers discouraged and worked to prevent mutual-fund timing. In 2003, the New York attorney general filed a complaint against Canary, alleging that Canary’s late trading and timing schemes were fraudulent and illegal and that Canary benefitted to the extent of tens of millions of dollars at the expense of mutual-fund investors.

Rule of Law

Issue

Holding and Reasoning ()

What to do next…

  1. Unlock this case brief with a free (no-commitment) trial membership of Quimbee.

    You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 824,000 law students since 2011. Some law schools even subscribe directly to Quimbee for all their law students.

  2. Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.

    Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.

Here's why 824,000 law students have relied on our case briefs:

  • Written by law professors and practitioners, not other law students. 46,400 briefs, keyed to 989 casebooks. Top-notch customer support.
  • The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
  • Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
  • Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.

Access this case brief for FREE

With a 7-day free trial membership
Here's why 824,000 law students have relied on our case briefs:
  • Reliable - written by law professors and practitioners, not other law students
  • The right length and amount of information - includes the facts, issue, rule of law, holding and reasoning, and any concurrences and dissents
  • Access in your class - works on your mobile and tablet
  • 46,400 briefs - keyed to 989 casebooks
  • Uniform format for every case brief
  • Written in plain English - not in legalese and not just repeating the court's language
  • Massive library of related video lessons - and practice questions
  • Top-notch customer support

Access this case brief for FREE

With a 7-day free trial membership