EIC/Wall Street investigations
Matthew's Feed
Jun 26, 2013
via Unstructured Finance

Ray Dalio’s all seeing reputation takes a hit

There are storm clouds on the horizon at Ray Dalio’s $150 billion Bridgewater Associates.

Yeah, excuse the weather imagery but it’s hard to resist given the sudden sharp reversal of fortunes with Bridgewater’s $70 billon All Weather portfolio. As Jenn Ablan and Katya Wachtel first reported, the portfolio that Dalio has long marketed to pension funds as an innovative investment strategy for navigating storm markets, isn’t doing so well in this stormy market.

Jun 12, 2013
via Unstructured Finance

Stevie Cohen: the pop star edition

Hard to believe, there was a time when Steven A. Cohen was not all that well-known on Wall Street outside of the hedge fund industry. Some even used to confuse the then-paunchy hedge fund trader with a popular magician with the same name.

But it’s true. In fact, a decade ago,  BusinessWeek (pre-Bloomberg takeover) did a cover story about Cohen and his then-$4 billion SAC Capital Advisors, calling  the once super secretive investor, “The most powerful trader on Wall Street you’ve never heard of.”

Jun 6, 2013

For two hedge funds, SAC redemptions hit close to home

NEW YORK (Reuters) – Two small investment firms that manage money for SAC Capital Advisors have a lot at stake, as billionaire investor Steven A. Cohen moves to return about $4 billion to his outside investors.

The firms, Adams Hill Capital and Scopus Asset Management, are listed on regulatory filings as other advisers to an SAC Capital portfolio, meaning each manages a dedicated pool of money for Cohen’s hedge fund.

May 28, 2013

Liberty Reserve’s website cited anti-money laundering policy

NEW YORK, May 28 (Reuters) – Older versions of the website
for Liberty Reserve, a company U.S. authorities claim was a
money transfer hub for criminal gangs trafficking in drugs and
child pornography, expressly said the firm “will not do business
with anyone suspected of, or directly involved in money
laundering.”

U.S. prosecutors in an indictment unsealed on Tuesday said
that is precisely what the Costa Rican-based Liberty Reserve was
doing.

May 25, 2013

Blackstone notifies Cohen’s SAC it intends to pull money: pension consultant

By Matthew Goldstein

(Reuters) – Billionaire hedge fund manager Steven A. Cohen is losing the financial support of Blackstone Group Inc, the largest outside investor in his embattled SAC Capital Advisors, which is yanking much of its client money, according to a letter reviewed by Reuters.

A pension consultant, in a May 21 letter to clients, said Blackstone has notified Cohen that it intends to “fully redeem” a significant portion of the roughly $550 million the investment firm has invested with the $15 billion hedge fund. The letter from pension consulting firm Russell Investments said Blackstone submitted its redemption notice to SAC Capital sometime before May 15 because of ongoing concerns about the insider trading investigation that continues to engulf Cohen’s fund.

May 23, 2013

SAC lawyers met with prosecutors to argue against charges: sources

NEW YORK (Reuters) – Lawyers for SAC Capital Advisors called a meeting with U.S. prosecutors and FBI agents in April to argue that there should be no insider trading charges filed against the $15 billion hedge fund or its founder, Steven A. Cohen, according to sources familiar with the matter.

Lawyers for the firm made an “aggressive presentation,” according to the sources, reviewing the government’s investigation in detail to support their claim that the government did not have enough evidence to charge Cohen.

May 20, 2013

US prosecutors’ subpoena of SAC’s Cohen puzzles defense lawyers

NEW YORK, May 20 (Reuters) – The decision by U.S.
prosecutors to compel Steven A. Cohen to testify before a
federal grand jury about allegations of insider trading at his
$15 billion hedge fund is leaving many criminal defense lawyers
scratching their heads.

In the past week, federal authorities have issued grand jury
subpoenas seeking testimony from Cohen and others at SAC
Capital, The New York Times first reported. Two people familiar
with the matter confirmed to Reuters that subpoenas had been
issued and Cohen was among those served.

May 6, 2013
via Unstructured Finance

Spinning single-family home investments into mortgage-backed securities

It’s generally been thought the main exit strategy for Wall Street-backed firms that are buying distressed homes to rent them out, is to convert to a REIT and file for an IPO. That attempt to cash-out on the single-family home trade has obvious benefits for the big institutional buyers but risks for retail investors as the math behind the buy-to-rent model becomes increasingly suspect.

But there’s another potential exit strategy for the institutional buyers beyond converting to a REIT or flipping homes earlier than anticipated and that’s becoming a home lender.

May 2, 2013

Special Report: Cheap money bankrolls Wall Street’s bet on housing

LAS VEGAS (Reuters) – Michael Marchillo, a plumber, has been trying and failing for months to buy a bigger home for his family here in Sin City. He was pre-qualified by a bank for a $130,000 mortgage, which a year ago would have landed a typical three-bedroom home in the area. No more. Now, the 36-year-old says, it’s hard to compete with “greedy investors” who come to the table flush with cash for quick deals.

Marchillo is on to something. The once-beleaguered Las Vegas housing market has been on fire since investment firms led by Blackstone Group LP, Colony Capital and American Homes 4 Rent began buying homes here some eight months ago, backed by $8 billion in investor cash to spend nationally.

Apr 22, 2013
via Unstructured Finance

Cleveland Fed leads in measuring stress

By Matthew Goldstein

 When you think of Cleveland, finance isn’t the first thing that comes to mind.

 If you’re old enough or a rock-and-roll historian, you might say DJ Alan Freed (and i don’t mean DJ as in electronic dance music).1 Or maybe, the old adage  “mistake by the Lake” comes to mind.