* Rokos suing Brevan Howard to overturn non-compete
* Plans to launch his own fund
* Brevan Howard says Rokos seeks to avoid "responsibilities"
* Rokos rejects hedge fund's counterclaim in new filing
(Writes through, adds detail, industry comment, background)
By Nishant Kumar
LONDON, Aug 26 Former Brevan Howard star trader
Chris Rokos has stepped up his legal challenge to a partnership
agreement imposing a five-year ban on him setting up in
competition against the hedge fund firm he co-founded.
The contractual dispute offers a rare insight into one of
Europe's largest hedge funds, with its response to Rokos's
challenge and the potential loss of investors to a new rival
highlighting the business risks such funds face when top traders
strike out on their own.
Court documents seen by Reuters show that Rokos, who left
Brevan Howard in 2012, issued a new filing last week after a
counterclaim the firm filed this month in response to the
lawsuit begun by Rokos in May.
The firm had urged the court to reject the Rokos lawsuit,
which is seeking to overturn an agreement preventing him from
starting his own fund and raising money from investors until
2018, but Rokos's latest filing denies that Brevan Howard is
entitled to enforce the agreement and reiterated his original
Rokos's surname is represented by the letter R in Brevan
Howard and he was marketed by the firm as a "star trader" who
was paid $900 million during his stint at the hedge fund.
Yet a fight between the two parties and an unusually long
five-year employment restriction -- 12 months is more typical --
has surprised many in the $3 trillion industry.
"I am surprised that they (Rokos and Brevan Howard) are
handling the issue in such a way, and publicly," said Michele
Gesualdi, portfolio manager at hedge fund investor Kairos. "It's
not in the interest of anybody."
Rokos, who made about $4 billion for Brevan's main fund
between 2004 and 2012, accounting for about 17 percent of its
profits, called the restraint on his ability to start a fund as
"unreasonable", preventing him from working "for one quarter of
his remaining career".
Such a curb would "atrophy" his skills and his professional
reputation would be "irreparably damaged", he said in the
The restrictions are "contrary to public policy and in
restraint of trade, and unenforceable", Rokos said. He also
asked the court to rule that Brevan Howard should continue to
pay him a share of the firm's profits until 2018.
The firm, meanwhile, has argued that Rokos is seeking to
avoid "obligations and responsibilities" designed to protect the
hedge fund's business, goodwill and reputation, because "they no
longer fit with his current wishes".
"Yet he still seeks to retain all financial benefits
conferred on him under those agreements and to exploit the high
personal profile, reputation and track record that Brevan Howard
has afforded him to damage its interest," the firm said.
Brevan Howard, which has lost money this year in a rare miss
since its launch more than a decade ago, managed $36 billion at
the end of July, it said in letter to investors that was seen
Since leaving the hedge fund, 43-year-old Rokos has spent
his time running a family office in London to manage his own
money, but the first signs of his discontent with the
non-compete clause emerged within two weeks of his receiving
yearly payments due to him as a retired partner of the firm.
The money -- $72.97 million, court documents showed -- was
paid only after Rokos confirmed that he was sticking to the
terms of the agreement with Brevan. Within days, Rokos's lawyers
sent a letter to Brevan Howard disclosing his intension to start
Alan Kilkenny, a spokesman for Rokos, declined to comment on
Tuesday, as did a spokesman for Brevan Howard.
The $25.8 billion Brevan Howard Master Fund has never lost
money in a calendar year since its launch in 2003, according to
the letter to investors.
It returned 20.4 percent in 2008. That performance at a time
when a global financial crisis wiped billions of dollars off
financial markets served to attract new investors, more than
doubling the firm's assets under management since then.
The fund has had a tough time this year, losing money every
month in the first half before gaining 0.7 percent in July to
cut 2014 losses to 3.7 percent.
(Editing by David Goodman)