[Image:  thecountrycaller.com]

New York state Judge Peter Sherwood has dismissed a lawsuit accusing the Sequoia Fund of recklessly making a huge, disastrous investment in Valeant Pharmaceuticals, causing billions of dollars of losses. In his decision, the judge said Sequoia shareholders failed to show it would have been futile, prior to suing in January 2016, to demand that the mutual fund's directors step in to unwind the investment because of their alleged conflicts of interest.

Named in the suit were: (i) Sequoia's investment adviser Ruane, Cunniff & Goldfarb; (ii) portfolio managers Robert Goldfarb and David Poppe; and, (iii) 3 directors, including author and chairman Roger Lowenstein.

The defendants were accused of gross negligence for letting Sequoia plow nearly one-third of its assets into Valeant, despite a policy capping its stake at 25%. Valeant shares have tumbled 93% in the last 1-1/2 years amid criticism of the Canadian drug company's pricing and business practices, and regulatory and congressional probes.

Sequoia sold its last Valeant shares in June, but its losses have left it still trailing 98% of its peers over 5 years, while assets have shrunk by more than half to $4.2 billion.

CONNECTION TO WARREN BUFFETT.    Ruane, Cunniff's late founder, William Ruane, was a friend and classmate of Buffett. When Buffett shut his investment partnership in 1969 to focus on Berkshire Hathaway, he recommended that clients invest with Ruane.

Sequoia's largest current investment is Berkshire. Buffett last April called Valeant's business model "enormously flawed," and Berkshire Vice Chairman Charlie Munger last week called Valeant's story "too good to be true."