Docsity
Docsity

Prepare for your exams
Prepare for your exams

Study with the several resources on Docsity


Earn points to download
Earn points to download

Earn points by helping other students or get them with a premium plan


Guidelines and tips
Guidelines and tips

Negligence & Business Judgment Rule in Investment Management: Hecht v. Andover Associates, Summaries of Mathematics

A court case where charlie hecht brought legal action against andover associates management company and ivy asset management corp. For negligence in investing with bernard l. Madoff investment securities llc, which turned out to be a ponzi scheme. The issues of duty to investigate, negligence, and the application of the business judgment rule in this case.

Typology: Summaries

2023/2024

Available from 04/08/2024

US-Summery
US-Summery 🇮🇹

4.2

(15)

937 documents

1 / 4

Toggle sidebar

This page cannot be seen from the preview

Don't miss anything!

bg1
H. Gavadian, S. Samuels,
Business management
pf3
pf4

Partial preview of the text

Download Negligence & Business Judgment Rule in Investment Management: Hecht v. Andover Associates and more Summaries Mathematics in PDF only on Docsity!

H. Gavadian, S. Samuels,

Business management

Haik Gavadian Sandor Samuels BLAW 308 5 February 2018 Hecht v. Andover Assoc. Mgmt. Co Facts: Charlie Hecht made some investments in Andover Associates LLC I. Andover Associates Management Company was the LLC’s managing member. Andover Management kept Ivy Asset Management Corp. as its consultant. Ivy recommended Andover use Madoff who also charges much less for his services. Madoff was discovered to be a Ponzi scheme in December 2008. On the behalf of Andover Associates, Hecht brought legal action against Andover Management and Ivy on several grounds in NY Supreme Court. Hecht alleged that Ivy was negligent in recommending Madoff’s firm without performing a sufficient “due diligence” investigation of their operation. Hecht alleged that Andover Management was negligent in failing to react to the suspicious confirmation slips and other red flags Andover Associates would have learned of Madoff’s fraud and saved their assets. Andover management asked the court to dismiss Hecht’s complaint by citing the business judgment rule, a rule protecting managers from liability in good faith agreements. Issue: Did Andover Management have the duty to have an investigation of Madoff prior to giving Madoff management of Associates investments Should Managements actions be considered negligent? Does the Business judgment rule apply in Managements case of hiring new investors? Did Andover management breach the duty of diligence and prudence by delegating management of investments to Madoff without conducting any investigation?

complete disregard for their Associates. Uncovering the fact that Madoff was a fraud after it was too late does not show diligence. Management’s motion to dismiss the negligence claim is denied. Conclusion: Andover Management’s motion to dismiss denied in favor of Hecht.