CDO fund loses case over margin payments, reports Bloomberg

Bloomberg reports that Wells Fargo has won a case in which a credit hedge fund sued it over a margin payment. VCG Special Opportunities Master Fund had accused Wachovia (which was later taken over by Wells Fargo) of making an unfair margin call on a $10 million CDO holding which the bank funded.

However, a federal court in New York ruled that the amount Wachovia had demanded was not “arbitrary or irrational” and was based on the prevailing market perception of the value of the trade, Bloomberg reports.

Wells Fargo has countersued and is claiming the $1 million in margin payments which it says the hedge fund still owes it.