Vice Chancellor Laster has denied Rule 12(b)(6) motions in an investor action arising from a 2021 asset sale in which the Hatteras Master Fund exchanged its portfolio of roughly 125 alternative investment products for illiquid preferred units in Beneficient in violation of a fundamental policy capping any one issuer at 25%, and doing so despite red flags including a CFO resignation, two auditor terminations, four independent-director resignations, an SEC accounting investigation, and goodwill comprising 88% of Beneficient’s balance sheet. The Board approved it without a fairness opinion or outside advisor, never pursued the dissolution plan, and never diversified even after the opportunity for liquidity. The value of the investment has since fallen 98% while the Investment Manager continued collecting its 1% annual fee.
The case caption is YWCA of Rochester & Monroe County v. Hatteras Funds, LP, C.A. No. 2024-1264-JTL (Del. Ch. Mar. 27, 2026).
Morris Kandinov LLP represents the YWCA and other investors.
For more information, contact Andrew Robertson.
