Two players are suing the NFL Player Association in a hedge fund scandal.
According to this Yahoo! Report:
"The two former NFL defensive backs insisted Friday that the league and its players' union are to blame for the $20 million they and five other current and former players lost in an alleged investment scam.
The seven players have sued the league and its union to recover the money, claiming the union endorsed the services of an investment firm even though its manager had liens against him.
According to authorities, Kirk Wright and his company collected as much as $185 million from at least 500 investors since 1997 and misled some of them to believe the value of those investments was increasing using false statements and documents. As recently as Jan. 25, the firm reported $166.6 million in assets spread across five hedge funds it manages and advises. That money is now missing, according to the SEC.
While Steve Atwater, 39, and Blane Bishop, 35, wouldn't disclose how much money they each lost, they said the scam has affected their lives and perhaps their futures, as they have relied on their NFL earnings for their retirements and vacations."
Geoffrey Rapp at The Sports Law Blog writes that..
The leading negligence case by an athlete against his own union is Peterson v. NFLPA, in which the court found for the NFLPA in an athlete's claim for misdirecting him to an "injury grievance" procedure when he ought to have filed a "non-injury grievance."
The court explained:
A union breaches its duty of fair representation only when its conduct toward a member of the collective bargaining unit is "arbitrary, discriminatory, or in bad faith." . . . The Supreme Court has long recognized that unions must retain wide discretion to act in what they perceive to be their members' best interests. . . . A union's representation of its members "need not be error free." . . . We have concluded repeatedly that mere negligent conduct on the part of a union does not constitute a breach of the union's duty of fair representation. . . . [A] union's unintentional mistake is "arbitrary" if it reflects a "reckless disregard" for the rights of the individual employee, but not if it represents only " simple negligence violating the tort standard of due care."
But there's no clear evidence in this new lawsuit that the NFL was trying to poorly invest funds. But according to Atwater and Bishop the NFLPA hired Wright without checking his background. Both players signed up for the NFLPA's Financial Advisor Fund , and that's how they were matched with Kirk Wright, who had been apprehended by authorities.
Will this have impact on the NFL's retirement fund? I don't think so. This was a program that some -- not all -- players particpated in, so it should have no impact at all on the total NFLPA retirement system. What should change is the NFLPA's way of evaluating hedge fund managers.
Oh..What is a hedge fund? It's bascially defined as a private investment fund or pool that trades and invests in various assets such as securities, commodities, currency, and derivatives on behalf of its clients, typically wealthy individuals. Some Commodity Pool Operators operate hedge funds, though there are many variations on this definition.
