EIC/Wall Street investigations
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Jun 25, 2011
via Unstructured Finance

Deutsche’s he said/she said derivatives mystery

By Matthew Goldstein

Valuing derivatives–especially complex ones tied to esoteric assets–is always a tough proposition. And maybe that’s what a previously unknown whistleblower action involving Deutsche Bank is all about.

The other day I wrote about a big settlement Deutsche reached in that matter with a former trader, who claims some of the bank’s most esoteric derivatives were improperly valued to hide trading losses. Deutsche denies the allegation and says an internal investigation found no substance to the trader’s charge.

Jun 24, 2011

Exclusive: Deutsche’s firing of top trader sparks probe

NEW YORK (Reuters) – In the fall of 2009, Deutsche Bank quietly fired one of its top derivative traders in London after a colleague in New York complained about finding “substantial trading anomalies” in a multibillion dollar portfolio of high-risk credit default swaps managed by the German-based bank, Reuters has learned.

The bank dismissed Alex Bernand after a quick internal investigation prompted by the employee’s complaint led to the discovery of improper trading in one of Bernand’s personal brokerage accounts, according to documents seen by Reuters and interviews with people familiar with the situation.

Jun 22, 2011

Exclusive: OneWest gains a ray of hope for Paulson in glum times

BOSTON/NEW YORK (Reuters) – John Paulson’s roll of the dice on a lender that rose from the wreckage of the financial crisis is emerging as one of the few big winners for the hedge fund manager in what is shaping up as a downbeat year.

A 2009 investment in a company that acquired assets from failed lender IndyMac is up some 200 percent, the billionaire hedge fund manager told investors when he met with some of them in Paris earlier this month.

Jun 20, 2011

GPS interference alters LightSquared’s mobile plans

NEW YORK, June 20 (Reuters) – LightSquared is dramatically
altering its plans for a high-speed wireless network because of
interference problems with GPS services, in the latest setback
for hedge fund manager Philip Falcone’s telecom start-up.

Falcone and his Harbinger Capital Partners’ investors have
gambled billions of dollars on the success of LightSquared. The
company said on Monday that it would now use a different block
of wireless airwaves for its network than originally planned,
after months of testing found the interference problems.

Jun 16, 2011

Ackman eyes ways to raise more permanent capital

BOSTON (Reuters) – Hedge fund superstar William Ackman is considering creating a different investment vehicle that would allow him to raise fresh permanent capital for his activist bets while still giving investors access to their money, three people familiar with his plans said on Thursday.

Ackman’s Pershing Square Capital Management has made no secret of its desire to increase the amount of its permanent capital. It told investors that the firm is inching closer to finding a solution to reach its goal.

Jun 11, 2011
via Unstructured Finance

John Paulson and his god-like status

By Matthew Goldstein

By most objective measures, hedge fund magnate John Paulson isn’t having a particularly good year.

His Paulson Advantage Plus fund lost nearly 6 percent in May. His Paulson & Co. fund empire is believed to have absorbed a $300 million paper loss when shares of Sino-Forest got hammered in the wake of a critical report from a noted short-seller, who claims the company has overstated the value of its lumber holdings. And the bullish bet he’s made on a rebound in the housing market appears to be several years too early.

Jun 10, 2011
via Unstructured Finance

Falcone really loves LightSquared

By Matthew Goldstein

Phil Falcone’s love for all things wireless and his upstart telecom company called LightSquared is well-known. Indeed, he’s gambled the future of his Harbinger Capital Partners hedge fund on LightSquared being a commercial success.

Earlier this week, we reported that Falcone was planning to deal with the high-level of redemptions at his hedge fund by giving withdrawing investors “shares” in LightSquared as an alternative to outright cash. Here’s Falcone telling investors why he is so bullish on bringing 4G high-speed wireless technology to the masses:

Jun 10, 2011
via Unstructured Finance

Dan Loeb looks to the east

By Matthew Goldstein

Is hedge fund manager Dan Loeb considering planting his Third Point flag somewhere in Asia?

A person close to the New York-based fund says Loeb has no plans to open an outpost in Asia. But investors familiar with Third Point are fueling speculation that Loeb may be considering doing that at some future time.

Jun 5, 2011
via Unstructured Finance

Tyrone Gilliams now tries his hand at the law

By Matthew Goldstein

Tyrone Gilliams, the self-styled online preacher, hip-hop promoter and commodities trader, who an investor claims misappropriated his $4 million, is now trying to be a lawyer.

For now, at least, the Philadelphia-based trader is representing himself in a civil lawsuit filed earlier this year in New York federal court by Cincinnati businessman David Parlin. In a court proceeding last week, Gilliams said he can’t hire a lawyer because a judge in a related lawsuit filed in New York state court has put a temporary freeze on some of his bank accounts.

Jun 3, 2011
via Unstructured Finance

Jobs and housing

By Matthew Goldstein

The jobs picture in the U.S. just got markedly worse based on the May unemployment report. And as long as job growth remains sluggish, anemic, pathetic–insert your own adjective–the housing market will remain in the dumps as well.

The only glimmer of good news is the nation isn’t shedding jobs–at least for now. But with the economy adding just 54,000 new jobs in May, that’s not nearly enough to work for all those recent college graduates hitting the labor market and the long-term unemployed who were early casualties of the financial crisis.