Quick Response: Schuyler Roche Plays Key Role in High Profile Securities Story

When Sentinel Management Group Inc. suddenly decided to freeze redemptions from its investors in August of 2007, attorneys at Schuyler Roche, P.C. stepped up quickly and forcefully to meet the needs of clients.

The story received international media attention as customers responded to a crisis that left many of them wondering what had happened to their investments. Prior to Sentinel's action, the company had promised its funds would be available for same-day withdrawal.

Schuyler Roche represents clients with claims exceeding $50 million against Sentinel.

Sentinel's unanticipated move led to an outcry among many investors, including futures brokers represented by Schuyler Roche. In less than a week, Schuyler Roche responded strongly to protect the interests of its clients -- and impacted how the situation was resolved. In fact, Schuyler Roche was the first law firm to bring a case related to Sentinel's actions to court: Schuyler Roche sought a temporary restraining order in federal court to order Sentinel to wire funds to Farr Investments Inc. At the time, the client needed funds from Sentinel to meet margin calls. Later, Schuyler Roche obtained a temporary restraining order against Sentinel restraining it from selling or transferring any more of Farr's securities. That action came during a week in which Sentinel moved to sell a substantial portion of the securities holdings to a hedge fund against the wishes of its clients.

Schuyler Roche partner Jeff Barclay played a vital role in the matter from the start, working with clients to protect their interests. Jeff specializes in commodity futures law, including hedge funds, commodity pools and futures commission merchants.

"Here is a situation in which we were able to marshal resources to immediately react, understand the problem and come up with solutions on the fly," says Jeff of the firm's work for clients affected by Sentinel's action. "Our clients were extremely appreciative."

The Sentinel situation was not only critical to clients—it became a highly publicized story as publications in Chicago and around the country focused on the firm's actions. While counseling clients, Barclay was also an effective spokesperson on behalf of clients to at least 11 media sources, including The Chicago Tribune, Chicago Sun-Times and The Wall Street Journal, all of which quoted him in stories on Sentinel. Other publications that quoted Jeff included Dow Jones News, Crain's Chicago Business, The Financial Times and Futures Magazine.

The story initially came to the attention of Schuyler Roche early one morning when Jeff received an email telling him Sentinel had halted redemptions.

Jeff and Schuyler Roche moved quickly to meet client needs. While some legal matters unfold in a matter or weeks or months, this one developed rapidly over a matter of days. Jeff learned about Sentinel's plan to freeze redemptions on August 13; on August 17th, Sentinel filed for Chapter 11 bankruptcy.

Working with other attorneys at Schuyler Roche, Jeff advocated for regulatory action against Sentinel. Schuyler Roche played an important role in persuading the National Futures Association (NFA) to issue a Member Responsibility Action against Sentinel, an action Jeff says "essentially shut the firm down."

An NFA visit to Sentinel found that the firm "failed to maintain adequate books and records, including records to demonstrate the location" of some accounts. Schuyler Roche also met with and encouraged the Securities and Exchange Commission to get involved in the Sentinel situation.

The firm's action was instrumental in getting the SEC to bring action seeking to enjoin Sentinel from violating federal security laws.

Sentinel is currently in bankruptcy, and Jeff continues to monitor the situation.

"We worked together to make a difference for our clients, and will continue to do so," says Jeff of the situation. "When clients contacted us with a serious and immediate problem, we recognized that we could play an important role as advocates on their behalf."

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