General Services

🔍 Background

In late 2023, South Spring Law Firm was retained to defend Kenmore Capital, a mid-size private equity firm, and its managing partner Alan Trask in a highly publicized securities fraud lawsuit. The plaintiffs, a group of high-net-worth investors operating under the name United Investors Group, alleged that Kenmore Capital had misrepresented the risk profile and financial health of a commercial property portfolio, resulting in losses totaling over $18 million.

The plaintiffs brought claims of:

• Securities fraud under Rule 10b-5 of the Securities Exchange Act

• Breach of fiduciary duty

• Negligent misrepresentation

• Fraudulent inducement

If successful, the case could have destroyed Kenmore’s business and Alan Trask’s career, while setting a dangerous precedent for investment fund disclosures in Texas.

⚖️ Legal Challenges

• Complex Financial Instruments: The case involved multiple layered investments, convertible notes, and third-party evaluations.

• Heated Public Scrutiny: Local media painted the defendants as opportunists, prompting reputational damage before trial.

• Risk of Precedent: An unfavorable ruling could have tightened standards for all mid-market funds.

• Multiple Jurisdictional Angles: Allegations spanned SEC violations, state-level fraud claims, and contractual disputes.

🧠 South Spring’s Strategic Defense

1. Forensic Financial Analysis
Led by financial law specialist David N. Harper, the firm partnered with forensic accountants to dissect every transaction, audit trail, and investor communication. The team established that all disclosures met industry standards, and that plaintiffs had been fully informed of all inherent investment risks.

2. Discrediting Plaintiff Claims
South Spring uncovered internal communications from United Investors Group revealing that they had independently adjusted their valuation forecasts—information withheld from the court during discovery. This was used to show that their loss was not due to deception, but internal miscalculations and speculative over-leverage.

3. Procedural Leverage & Motion to Dismiss
Using a combination of procedural strategy and substantive arguments, South Spring filed a Rule 12(b)(6) motion to dismiss based on lack of standing, failure to state a claim, and improper venue for several claims. They also challenged the alleged breach of fiduciary duty on the grounds that no such legal relationship existed contractually.

4. Strategic Counterclaim
Not only did the firm seek dismissal—they filed a counterclaim alleging tortious interference and defamation, arguing that the baseless lawsuit and public statements had directly harmed Kenmore’s investment prospects.

🏁 The Verdict

Following an intensive 10-month pretrial process and a two-week evidentiary hearing, the court ruled in favor of Kenmore Capital:

• All claims were dismissed with prejudice, citing insufficient evidence and plaintiff misrepresentation.

• The court awarded Kenmore $1.4 million in damages for reputational harm and business interference.

✅ Outcome & Impact

• Kenmore Capital retained all operating licenses and was cleared of wrongdoing.

• The ruling reaffirmed the strength of private fund disclosures and protected investor agreements governed by risk-aware disclosures.

• The counterclaim victory deterred future baseless suits and restored market trust in Kenmore.

🗣️ Client Testimonial

“We were up against powerful interests and false narratives. South Spring didn’t blink. Their financial expertise, precision, and courtroom dominance not only cleared our name—they protected our future.”
— Alan Trask, Managing Partner, Kenmore Capital

📘 Key Legal Takeaways

• Clear, accurate financial disclosures are a firm’s best defense.

• Procedural mastery can end a case before trial.

• Counterclaims can be an effective shield against reputational damage.

• South Spring’s financial law team blends litigation skill with deep business understanding.