Local Business Digest: Carlyle Group Sued Over Losses at Mortgage Securities Fund

LEGAL

Carlyle Sued Over Fund's Losses

Michael Huffington, a former U.S. Senate candidate from California, is suing the Carlyle Group for $20 million he lost last year in the collapse of Carlyle Capital, one of the firm's European-based funds that invested in mortgage-related securities.

The lawsuit, filed yesterday in Massachusetts state superior court, alleges that Carlyle co-founder and managing director David M. Rubenstein misrepresented Carlyle Capital's risk in conversations with Huffington.

Carlyle, a Washington-based private equity firm, and its investors, lost $700 million in the fund's collapse. The lawsuit is the first connected to losses from the fund.

Carlyle Capital's business was to borrow money to buy the securities and then make money on the difference between the firm's borrowing costs and what it earned on the interest paid on the bonds. The fund collapsed after repeated margin calls from lenders.

Huffington, who was married to Huffington Post founder Arianna Huffington, could not be reached for comment.

A Carlyle spokesman declined to comment.

-- Thomas Heath

HOSPITALITY

Marriott Shares Rise After Rating Upgrade

Shares of Marriott International rose after a JMP Securities analyst upgraded the hotel company, saying its shares were undervalued.

Analyst William Marks raised his rating on the company to "market outperform" from "market perform."

Marks said the company's attributes include a "solid balance sheet, and fee-based revenue derived from limited service and full-service properties."

For the quarter ended March 27, Marriott lost $23 million, but adjusted results topped Wall Street expectations. The results also reflected a sharp decline in revenue per available room, or revpar, over the prior year.

Shares rose $1.07, or 5.5 percent, to $20.64. Marriott is scheduled to report second-quarter results on Thursday.

-- Associated Press