NEWS
A Texas judge accused of ethics violations is facing fresh accusations of insider trading related to the merger between MGM and Amazon
Courtesy of sjnovels/Instagram
Explosive new allegations have emerged in the tangled bankruptcy case of Texas hedge fund Highland Capital Management, raising serious questions about potential corruption and conflicts of interest.
A whistleblower complaint filed with the SEC accuses Highland’s court-appointed trustee, James Seery, of improperly profiting from insider information related to Amazon’s acquisition of MGM Studios last year. The complaint alleges that Seery acquired a creditor’s stake in an entity holding substantial MGM shares at a steep discount, knowing the value would skyrocket after the merger. Seery allegedly provided false testimony in bankruptcy court to conceal the true value of the shares, which soared from $22 million to $55 million in a matter of months.
These troubling charges land amid ongoing controversy surrounding Bankruptcy Judge Stacey Jernigan, who continues to preside over the Highland case despite calls for her recusal. Jernigan has published two novels featuring characters closely modeled on herself and Highland founder Jim Dondero, portraying the hedge fund manager as a villain. Experts argue these books create, at minimum, an appearance of bias.
Nonetheless, Jernigan has consistently ruled in favor of Seery while rejecting transparency efforts and rebuffing allegations of wrongdoing. The whistleblower complaint asserts she turned a blind eye to Seery’s alleged insider profiteering, refusing to hear testimony from industry experts.
If proven true, these claims point to serious ethical breaches and potential corruption. The SEC must thoroughly investigate whether Seery misused his court-appointed position for personal gain. And Jernigan may need to finally acknowledge her novels have irreparably tainted the proceedings and step aside.
At stake is the integrity of the bankruptcy process. Hedge funds and creditors alike deserve impartial justice, not courtroom drama. This saga underscores the urgent need for oversight and accountability.
TMX contributed to this article.
