Canada’s Public Sector Pension Investment Board sued Saba Capital Management in New York state court Friday, saying the firm marked down a “significant portion” of the fund’s portfolio after the pension asked for a full redemption of its shares, only to boost the values of the bonds in the fund immediately afterward.

Weinstein, who co-ran Deutsche Bank AG’s credit business before starting Saba Capital in 2009, has suffered losses for three straight years amid reduced price swings, prompting redemptions and leaving assets down from a peak of $5.5 billion three years ago.

The Montreal-based pension board, which oversees the retirement savings of Canadian federal public servants, said it was the Saba Offshore Feeder Fund’s largest investor, having bought a $300 million stake in February 2012 and another $200 million the following year.

The board said it asked to redeem its shares early this year after the fund’s net asset value had fallen to $1.5 billion from $3.9 billion by the summer of 2014. Those losses appeared to be “unrelated to any market development that could or should have adversely affected the fund’s performance had the fund been properly managed,” according to the suit.

Saba’s main fund has gained 5.2 percent this year through August, according to an investor letter.

Jonathan Gasthalter, a spokesman for Saba at Sard Verbinnen & Co., didn’t immediately respond to e-mail and voice-mail messages requesting comment on the lawsuit. Weinstein didn’t immediately return a call to his office.

Can’t Explain

The board said it asked for a full redemption of the shares after Saba couldn’t explain why the fund suffered such a steep decline, and rejected a request to redeem the shares in three installments to keep other investors from finding out.

The board said Saba then marked down the bonds to deprive the board of the amount it was entitled to receive as of March 31, and increased their values a month later to what they were immediately before the redemption.

“They did so to stanch further investor defections from the fund and to directly benefit themselves by boosting the residual value of their investments in the fund and other affiliated hedge funds with exposure to the same bonds,” according to the suit.