An energy commodities trader for a Greenwich hedge fund is suing under whistleblower provisions of the Dodd-Frank act, claiming the fund’s partners ignored an “Enron situation” in the plaintiff’s words that wiped out investors.
Litchfield resident Nikhil Dhir sued Vermillion Asset Management and its partners Drew Gilbert of Greenwich, Chris Nygaard of Darien and Chris Zuech, the fund’s chief compliance officer, as well as Carlyle Group which acquired Vermillion in 2012 when the fund had some $2.2 billion in assets under management. Dhir filed the lawsuit in U.S. District Court in New Haven under citing the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Sarbanes-Oxley Act that was created after the 2001 collapse of Enron. Dhir also is suing for wrongful discharge under the Connecticut General Statutes.
According to Dhir’s claims, Vermillion had an investment vehicle called the Viridian Fund it managed from offices in New York City and Greenwich, which among other features promised investors low volatility by having no more than 30 percent of the fund allocated to any single commodity. Dhir alleges that partners instead plowed 90 percent of the fund into investments pegged to mistaken forecasts for freight rates over the warnings of portfolio managers, with the result that the Viridian fund was wiped out.
“Even after the losses were clearly unacceptable, the partners knowingly (misled) the investors that they believed that the freight investment position would come back,” Dhir stated in his lawsuit.