The Bermuda-based fund administrator of the scandal-hit Manhattan Investment Fund has had a legal action filed against it for $500,000.

The writ, filed by Michael William Rhode, is the ninth case logged at the Supreme Court in Bermuda in connection with the investment fund.

The hedge fund, which was registered in the British Virgin Islands but was administered and audited by Bermuda companies, admitted in January that it had lost $500 million after previously claiming it had made massive profits.

The scandal was unearthed after Deloitte & Touche LLP, the Bermuda auditors of the fund, withdrew approval for the fund's financial statements for 1996, 1997, and 1998. A subsequent investigation by fund administrator and local Ernst & Young affiliate Fund Administration (Bermuda) Inc. revealed the extent of the losses and accused the fund's managers of misrepresentation.

The flurry of writs in connection with the case have included ones against The Bank of Bermuda in a bid to freeze the fund's assets.

Ernst & Young spokesperson Leslie Zuke said the company could not comment in detail about the case.

He said: "Fund Administration Services (Bermuda) Ltd. resigned as a result of receiving notice that Manhattan Capital Management had misrepresented its trading results. The SEC's allegations are consistent with our belief that Manhattan Capital Management, the fund manager, took extensive steps to hide the truth from Fund Administration Services (Bermuda) Ltd. and the investors.

"Fund Administration Services (Bermuda) Ltd. is an affiliate of Ernst & Young Bermuda, a member firm of Ernst & Young.'' COURTS CTS