Preston Hollow Capital

Mar 22, 2022

2:16 AM IST, 22 Mar 2022 1:32 AM IST, 22 Mar 2022 2:16 AM IST, 22 Mar 2022 Save (Bloomberg) -- Preston Hollow Capital LLC said in a court filing that U.S. bond-market powerhouse Nuveen LLC should be forced to pay as much as $628 million in damages for trying to coerce banks into not doing business with its smaller rival. (Bloomberg) -- Preston Hollow Capital LLC said in a court filing that U.S. bond-market powerhouse Nuveen LLC should be forced to pay as much as $628 million in damages for trying to coerce banks into not doing business with its smaller rival. Nuveen’s head of municipal investment John Miller smeared Preston Hollow and wrongfully used his firm’s market power in a bid to blackball its competitor, Dallas-based Preston Hollow said in a court filing earlier this month. It’s the latest salvo in a more than three-year legal battle that’s headed for a July trial in state court in Wilmington, Delaware. “Preston Hollow will prove at trial Nuveen engaged in a coordinated attack on Preston Hollow, including false and defamatory statements to the largest and most influential municipal bond broker-dealers,” lawyers for Preston Hollow said in an unsealed March 2 filing. “As a result, the dollar volume of municipal-bond transactions originated by Preston Hollow sharply declined in 2019 and that decline continued in 2020 and 2021.”  Nuveen, one of the biggest buyers of U.S. state and local government bonds, denied in a separate filing that it had targeted Preston Hollow’s business and argued that it shouldn’t be hit with any damages. Representatives of Nuveen didn’t immediately return emails Tuesday for comment on Preston Hollow’s demand for damages. Nuveen is a unit of teachers’ investment group TIAA and the second-largest municipal bond-fund manager. Miller oversees $230 billion of municipal assets. New York-based TIAA has more than $1.3 trillion under management. Preston Hollow occupies a niche in the $4 trillion municipal-bond market, by lending directly to risky projects. The fund has extended $3.7 billion in loans, financing projects such as hospitals in California and New York. Preston Hollow’s damages demand became public March 2 as part of the fund’s request to block an expert from Nuveen from testifying about it at trial. The filing had originally been sealed. Professor Glenn Hubbard, Nuveen’s expert, contends the fund’s damage assessment is based on flawed assumptions and shaky math. Hubbard, a finance and economics professor at Columbia University, argues even if jurors were to agree Nuveen harmed Preston Hollow, there’s no basis for awarding the fund more than $305 million, according to court filings. Testimony from Professor Michael Goldstein , Preston Hollow’s expert, “will confuse the jury and severely prejudice Nuveen,” the filing said. Goldstein is a professor of applied investment at Babson College in Massachusetts. The case is Preston Hollow Capital LLC v. Nuveen LLC, N19C-10-107-MMJ, CCLD, Delaware Superior Court (Wilmington). ©2022 Bloomberg L.P.