A hedge fund spent $150,000 sound-proofing an office during Washington Mutual's bankruptcy court case so that it could profit off of the bankruptcy without being accused of wrong doing, according to Business Insider's Courtney Comstock.  WaMu shareholders say that Aurelius Capital Management profited off of nonpublic knowledge that a lawyer at the firm, Dan Gropper, gained during WaMu's bankruptcy case. 

Some of their evidence, according to the AP:

• Gropper and another Aurelius official met in January 2010 with Washington Mutual representatives
• Aurelius signed two confidentiality agreements in 2009 that had allowed it to participate in previous settlement discussions and learn nonpublic information and had agreed to limits to its ability to trade in Washington Mutual securities

Aurelius' defense:

• Gropper [testified that he] and another Aurelius official met in January 2010 with Washington Mutual representatives, they were not privy to settlement negotiations.  They instead  discussed how a reorganization plan might distribute money to creditors in the event of a settlement.
• Aurelius spent $150,000 to soundproof his office so others could not hear his conversations
• "We knew, and the market knew in general ... that there were ongoing negotiations," Gropper said. "We did not participate in those negotiations, and we did not know the substance of those negotiations."

Despite their best interior design efforts, WaMu shareholders, who don't approve of the firm's bankruptcy reorganization plan, are accusing it of wrongdoing anyway. 

Gropper is currently in court fighting a lawsuit from WaMu shareholders that alleges Aurelius had an unfair advantage trading WaMu securities during WaMu's bankruptcy case. 

Owl Creek is also accused of wrongdoing.

For the original story, go to:   [Business Inisder, 7/19/11]