When Canada’s Public Sector Pension Investment Board tried to redeem $500 million from Boaz Weinstein’s Saba Capital in 2015, the $116 billion pension fund for the Royal Canadian Mounted Police came to believe it was shortchanged during the process. In the fall of 2015, PSP sued Saba Capital, accusing the highly followed hedge fund of “self-dealing” and mis-marking illiquid fund assets to minimize the redemption, thus growing value for its remaining fund investors.

Now, PSP is walking back those incendiary claims in a settlement it has struck with Saba Capital. On Tuesday, PSP said it is putting litigation over the $500 million redemption behind it, resolving the matter with Saba “as a commercial dispute involving a good faith disagreement over the valuation of two highly illiquid corporate bonds.”

While both PSP and Saba are moving on, the settlement is yet another reminder of the perils looming over the hedge fund industry.

Saba Capital is known on Wall Street as one of the smartest investors when it comes to complex strategies such as capital structure arbitrage and long/short relative value in credit markets. It also is one of the bigger traders of credit default swaps, where it puts on tail hedges that can offer tremendous payouts when markets erupt in turmoil. Saba Capital famously made major profits by taking the other side of JPMorgan’s $6.2 billion “London Whale” trading loss involving the bank’s back-fired hedges involving an off-the-run credit default swap index.

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