(Bloomberg) -- Marathon Asset Management LLP won a legal battle to claw back 10.4 million pounds ($13.2 million) in pay from co-founder Jeremy Hosking, who quit and hired other employees at his new firm.
London Judge Guy Newey said the profit share awarded to members of a partnership could be treated as remuneration and therefore could be forfeited. Marathon, a London-based firm which manages about $50 billion, sued Hosking for breaching his fiduciary duty by discussing his plans for a new business with other employees.
Jeremy Hosking
Hosking has accepted wrongdoing, apologized and agreed to pay about 1.3 million pounds in damages, his lawyers said at trial. They argued he shouldn't have to return his share of Marathon's profits which are not treated the same as remuneration under U.K. law. Hosking has already repaid the 10.4 million pounds after losing an earlier ruling in private arbitration. He was seeking to get that money back in today's case.
Lawyers for Hosking said they were disappointed with the ruling.
“We expect this decision regarding forfeiture of partnership profits will have wide implications for partnerships and LLPs,” Maria Frangeskides, a partner at Orrick, Herrington & Sutcliffe, said in a statement.
Spokesmen for Hosking, who now works at Hosking Partners LLP, and Marathon declined to immediately comment after the ruling.
Hosking founded Marathon with Neil Ostrer in 1986 and was head of its global division. The Marathon employees who quit to join his new firm would have left anyway, his lawyers said at trial.
The London-based asset manager in the lawsuit has no connection to Marathon Asset Management, the $12.8 billion New York firm specializing in distressed debt.
There is “no good reason to treat profit share differently from other forms of remuneration in the (probably unusual) cases where it can be identified as a reward for undertaking specific duties, Judge Newey said. Marathon made a profit of 146 million pounds in the year ending March 2012, according to the judge's ruling.
The case is Jeremy Hosking v. Marathon Asset Management LLP, High Court of Justice Chancery Division, HC-2015-004901
To contact the reporter on this story: Kit Chellel in London at cchellel@bloomberg.net. To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net.
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