2.26.2009

At Least 3 Hedge Funds Implode Since Madoff Fraud Revealed

At least three more hedge funds have imploded or shut down flagship funds since the revelations of the Bernard Madoff scam. These hedge funds are not accused of fraud, but were forced to close funds due to poor performance and investor redemptions; Highland Capital Management, Ascot Partners, and Gabriel Capital.

Highland Capital Management has recently declared its Highland CDO Opportunity Fund insolvent. The fund had managed assets in excess of $300 million and all remaining assets will be used to pay creditiors, leaving shareholders with nothing. Highland has managed assets in excess of $40B and the firm remains intact.

Ascot Partners, a $1.8B fund will be winding down and distributing any assets that remain. Suspending withdrawals and selling remaining assets is the fund's "only realistic option" after losing 39 percent this year through Nov. 30, founder Ezra Merkin said in a Dec. 18 letter to clients. The process will supposedly take several years to complete because the assets are illiquid. Ascot was also sued in December of 2008 for investing with Madoff, a move that helped the firm lose almost all of its assets.

Gabriel Partners, also run by Ezra Merkin, shut down in late December amid similar problems to what occured at Merkin's Ascot Partners; naimly large stakes in Madoff's fund.




No comments:

LinkWithin