Barclays Bank has lost a lawsuit that could cost it millions of pounds. The defeat was at the hands of a former employee, a proprietary trader named Alan Burnell who is founder of Nylon Capital.
The venue last February of Barclay's loss was the London Court of International Arbitration, it was revealed last week. Nylon, founded in 2004, had received several hundred million pounds of capital investments from Barclays with the understanding that the seed money would remain with Nylon for a period of at least 12 months. Barclays pulled the plug after a scant four months.
Nylon's loss of seed capital caused it to liquidate its entire portfolio to repay Barclays. The London judge found Barclays liable for damages – the amount is to be set later this month.
The Barclays investment in Nylon topped several hundred million pounds. The bank also ran Nylon's back office and provided other support. In 2009 Nylon earned £12.4 million, but then lost £2 million in 2010. The investment firm is seeking a refund of expenses from Barclays and to have the bank removed from the board.
Nylon remains optimistic, and is currently raising a new round of capital to restart its global macro strategy.
© 2011 Hedge Fund Writer LLC
