Su Zhu, the founder of investment firm Third Avenue Management, is reportedly worried about the possibility of a jail term in response to a recent court-appointed liquidators’ class action settlement report.
Background
The class action settlement report, which was filed in May of 2019, accused Zhu and two other executives of the company of mismanagement and overcharging mutual fund investors. The company had approximately $15 billion in assets under management at the time of the filing.
What’s at Stake
If the charge is proven in court, Zhu could face up to 10 years in prison or fines of up to $5 million. The liquidators have also reportedly asked the court to bar Zhu from serving in any board of directors or owning any fiduciary device.
Zhu’s Response
Zhu has responded to the allegations, accusing the liquidators of having a “lack of expert insight … into the complex issues involved in a settlement.” He also said that he had followed the advice of counsel and that he had been transparent with the investors throughout the settlement process.
Next Steps
It is unclear at this point what the next steps in this case will be. It is possible that Zhu may be able to reach an agreement with the liquidators to avoid a jail term, although this will likely depend on the severity of the charges.
Conclusion
In any case, Su Zhu is clearly concerned about the possibility of a jail term as a result of the liquidators’ class action settlement report. It remains to be seen whether a settlement or other agreement can be reached to avoid this outcome.
Highlights:
- Su Zhu, the founder of Third Avenue Management, is facing up to 10 years in prison or a $5 million fine in response to a class action settlement report.
- The liquidators have also asked the court to bar Zhu from serving in any board of directors or owning any fiduciary device.
- Zhu has responded to the allegations, accusing the liquidators of lacking expert insight.
- It remains to be seen what the next steps in the case will be.