Hugh F. Culverhouse v. Paulson &…

Summary

The court answered a certified question in the negative, holding that an investor in a feeder fund could not bring a direct action against the managers of the underlying investment fund for losses suffered by the investment fund. Applying the direct-versus-derivative test, the court concluded that the feeder fund, rather than the investor, initially suffered the alleged harm and would receive any recovery. The court distinguished the contrary result in an earlier feeder-fund-related decision because the investors there had a direct relationship with the investment fund.