Update: Evershed signed agreement to keep fund open

Patrick Evershed's case against former employers New Star took another turn today after it was revealed he signed an agreement to keep his fund open despite its increase in size.

Following an appraisal meeting, Evershed admitted he signed an agreement which stated his fund would remain open.

At the hearing for constructive unfair dismissal bought by Evershed, it was revealed Evershed signed an appraisal form on 11 December 2007 in which one of the terms stated 'the fund will remain open'.

However, defending his actions, Evershed said despite giving his signature he disagreed and was 'bullied' into keeping the fund open.

'I was at the time asked if I thought there were opportunities in the micro-cap space and with the market's steep decline, I thought it was a great opportunity," he said.

"However it was the view of my line manager to keep the fund open - I did not agree and ultimately this has completely ruined my reputation as my performance deteriorated as a result of getting significant inflows too quickly to manage."

The point is an important one in the case given Evershed's claim in his witness statement that New Star founder John Duffield "constantly bullied me into allowing more money to flow into the fund".

Evershed has already admitted that in 2004 he asked New Star to promote his fund, despite having previously wanted it capped at £50m.

Under cross-examination from Daniel Oudkerk, New Star's lawyer, Evershed said: "I asked Duffield to market the fund as a lot of my micro-caps were trading at wide discounts, and so I asked for an additional £10m (capacity) - which paid off as it sent the fund to the top of its peer group in 2005.

"However, Duffield continued to market the fund which was against my wishes - resulting in it trebling from £50m to £150m."

Evershed said he told Duffield in 2005 he did not want any further inflows, but said Duffield disagreed and said he would take the blame if performance suffered.

Evershed added: "I did not argue with him because I feared I would receive a written warning."

Evershed added he was bullied into marketing his fund and was given orders to 'talk to the press at any given opportunity'.

Oudkerk has also argued Evershed would not be in a job today even if he was retained by Henderson following the buyout of New Star.

"Today Henderson do not have a micro-cap fund and the closest fund which resembled yours at New Star was Carl Stick's - which is also no longer in existence.

"You have no other expertise aside from micro-cap to offer an employer."

Oudkerk added Evershed could also have done more too protect his fund's performance. "You had the capability to invest in more liquid companies, yet chose not to despite the fund's performance deteriorating."

The hearing is now in its second week.

Last week Patrick Evershed was forced to apologise after a Professional Adviser article was used as a key piece of evidence.

In early 2005, with the fund at around £80m, Evershed said he "reluctantly and stupidly" reopened the fund, after a meeting with Duffield and head of marketing Mark Skinner.

"I fear that the large number of people who invested in my fund as a result of the proposed £50m cap, lost many millions as a result of the removal of [it]," he said.

But Oudkerk produced a 2005 interview from Professional Adviser, where Evershed said he was "happy with running large amounts of money".

"My fund is only £200m in size, which makes it easier to move around money," the article continued.

Evershed admitted he made a "very serious error" in his testimony, blaming recent heart surgery for failure to check the details of his witness statement.

"I shouldn't have said that," he said. "It isn't what I thought deep down."

Accusing Evershed of "embellishing" his statement, Oudkerk said that in fact, he was perfectly happy running a £200m fund.

The hearing, at the London Central Employment Tribunal, is currently considering whether the testimony of Theodora Zemek will be admissible as evidence.

Zemek, currently at Axa Investment Managers, alleges she was also bullied by Duffield. However, her testimony was submitted late to the tribunal on 2 November.

Evershed's lawyer Daphne Romney QC, said Zemek was "integral" to the case.