Fortress Accused by Ex-Partner of Mishandling ‘Promote’ Profits

A former Fortress Investment Group LLC partner sued the asset manager, claiming it made risky bets with money that should have been earmarked for his share of its carried-interest profits.

The lawsuit, made public Thursday, accuses Fortress of making speculative investments with pooled funds representing the share of its “promote"—the fee earned on overperforming private equity investments—that belongs to individual managers who were entitled to a percentage of the profit.

The maneuver let Fortress keep making management fees on the funds, take chances on long shots without jeopardizing investor money, and “compensate current investment managers to the detriment of former ...