the securities firm defamed him in public statements after seizing a $33 million fund he managed.

The suit, filed in federal court in Manhattan, claims that Daiwa's statements were false and implied Mr. Lipschutz "is an unscrupulous and untrustworthy investment manager who breached a fundamental fiduciary duty.'' In July of 1995, Daiwa seized the account of Mr. Lipschutz's Bermuda-based RCM Global Long Term Capital Appreciation Fund Ltd. to cover a $35 million loss in a separate account belonging to Lipschutz's New York-based Rowayton Capital Management Ltd., which managed RCM's assets. RCM's assets have been frozen since last August.

Mr. Lipschutz's suit alleges Daiwa said publicly that he told Daiwa that RCM and Rowayton were affiliates and that he had agreed to offset the deficit in Rowayton's account with the fund's account.

Mr. Lipschutz has said repeatedly that the fund and Rowayton have different owners and the seizure amounts to the theft of millions of dollars from his shareholders.

Within a week of the statements, Mr. Lipschutz lost all of the $75 million he had under management, the suit said.

Mr. Lipschutz is seeking $1.6 billion in damages.

"The claims are totally meritless,'' Fred Garcia, a spokesman for Daiwa America said.

Daiwa America is a subsidiary of Daiwa Securities Co., one of Japan's largest securities firms.

In August of 1995, a New York judge ordered the assets returned and frozen.

In May, RCM filed for Chapter 11 bankruptcy protection from creditors.

RCM listed assets of $34 million and liabilities of $35.8 million in its bankruptcy petition, which was filed in US Bankruptcy Court in Manhattan.

The matter is due back in court on September 4 when Daiwa's motion to have the Chapter 11 motion thrown out is to be heard. -- Bloomberg COURT CTS