Wednesday, January 21, 2009

Hedge Fund Drama: SEC Case Filed on Arthur Nadel, more about other scandals

"From at least January 2008 through the present, the Defendants, who provide investment advice to Scoop Real Estate, Valhalla Investment Partners, Victory IRA Fund, Viking IRA Fund, and Viking Fund (collectively the "Hedge Funds") have issued materially false and misleading account statements tot eh Hedge Funds' investors. The false account statements overstated the value of investments in the Funds by approximately $300 million."

US Securities and Exchange Commission
Litigation Release No. 20858/January 21, 2009
Securities and Exchange Commission v. Arthur Nadel, et al.
SEC Compliant (pdf)

"Poof! Another Fund Manager Disappears"
Liz Moyer, Forbes 1/21/09
"Some of the money in the funds was transferred to secret bank accounts only Nadel controlled.."

Other Money Managers of Note:

Marcus Schrenker - Faked his death by crashing his airplane, and was found in a campground.
Regulators were warned about parachuting financer (Rick Callahan, Associated Press, 1/19/09)

Adolf Merckle - Killed himself after losing several hundred million euros on the wrong end of a short sell.
Financial Casulty: Why Adolf Mercle Killed Himself (William Boston, TIME, 1/6/09)
Phoenix MAy Be Sold for Up to EU6 Billion After Merckle's Death (Ambereen Choudhury, Bloomberg, 1/22/09)
Photo from Bloomberg

Daren Palmer - Idaho Investigates Alleged Hedge Fund Fraud FINalternatives 1/20/09
Rod Stringer- SEC Charges Texas Man With Hedge Fund Fraud FINalternatives 1/21/09
Marc Dreier - Dreier Said to Promise Son $12.5 Million in Property (David Glovin, Bloomberg 1/21/09)
Bernie Madoff- List of Entities Announcing Exposure to Madoff Investment Fraud Wall Street Journal 1/20/09
Sam Isreal - Faked his death to escape a prison sentence and lived in a campground until he turned himself in.
Wanted fund chief rides scooter to police HQ, turns himself in. USA Today, 7/2/08

More from the past:

Steven Markovitz
- Mellennium Partners Hedge Fund Trader
Small-Time Crooks Michael Maiello, Forbes 10/2/03
Three Merrill Brokers Fired in Hedge Fund Scandal Matthew Goldstein, The 10/2/03

Investors rush to exit hedge funds after record losses Miles Costello, Times Online 1/22/09

FBI sees more indictments from backdating: An assistant director says FBI is vigorously investigating 55 corporations.
Shaheen Pasha, CNN Money, 10/12/06
"Hedge funds are the wild, wild west of investing," he said. "The problem comes when hedge funds become more and more like Ponzi schemes." - Chip Burrus, Assistant Director, FBI

Focus in Fund Scandal Turns to Bear Stearns Matthew Goldstein, The 11/13/03

The $500 Billion Hedge Fund Folly James M. Clash, Robert Lenzner, Michael Maiello, Josephine Lee, Forbes 08/06/01

"The industry--or, at least, the term "hedge fund"--dates back to 1949 and money manager Alfred Winslow Jones. He pitched the notion that a smart money man could protect investors against market spills by going long some stocks and short others."

1 comment:

Hedge Fund Lawyer said...

Unfortunately, the market turmoil has led to increased calls for regulation of the hedge fund industry. Both Shapiro and Geithner have stated a desire to see more hedge fund regulations. While regulation (and registration) is not the end of the world, it will increase costs for a hedge fund start up.