Farmers Say New York Financial Firm Knew Their Customer Would Declare Bankruptcy

A bankruptcy maneuver appears to have taken advantage of farmers. No, we’re not talking about the MF Global cover-up.

Texas farmers suing Scopia Capital Management

According to a FinAlternatives report, a group of Texas farmers is suing a New York hedge fund saying it defrauded them in a bankruptcy play.

The dispute is between farmers of “guar,” a highly profitable bean used in shale gas production and fracking processes, and Scopia Capital Management.  In the middle of the deal is an organization, West Texas Guar, that apparently procured the guar from 285 farmers but failed to pay, instead filing for bankruptcy.  Scopia is the largest shareholder of West Texas Guar.

The deal gets muddy, as a federal bankruptcy...