Hedge Fund Blowups/Losses

[jasonleonard]

Curious. What happens when managers/traders hide their PnL stating better returns than they've had?

I know that guy from Barring's did time. What about that shop with losses from energy. I'm sure there are others, but what happens to the people?

jason

 

[marketsurfer]

Quote from jasonleonard:

Curious. What happens when managers/traders hide their PnL stating better returns than they've had?

tough to do with a third party administrator.

surf

 

[PAPA ROACH]

They get famous and start a new fund. Don't you get it by now? People that are fuck-ups get rewarded by wall street. There is a long list of 10 time losers that keep getting money from people.

 

[ASusilovic]

Quote from PAPA ROACH:

They get famous and start a new fund. Don't you get it by now? People that are fuck-ups get rewarded by wall street. There is a long list of 10 time losers that keep getting money from people.

From the NYPost.com:

The Bear Stearns portfolio manager who kicked off the deepening bond market crisis is trying to move on with his life and launch a hedge fund, but a worried Bear isn't likely to let him depart so quickly. Ralph Cioffi, the portfolio manager of the two Bear Stearns Asset Management hedge funds that collapsed in June, has been quietly attempting to put together another fixed-income hedge fund, according to people familiar with the matter.

Despite the bond market's continuing woes, he has told people that several of his fund's former clients have expressed an interest in investing with him. While details about the fund's strategy are sketchy, much of it would likely center on investing in distressed mortgage debt, where even the most creditworthy bonds are considered historically cheap. The capital for Cioffi's fund was slated to start out in the $150 million to $250 million range.

Bear, however, is not willing to let Cioffi just walk away.

 

[jasonleonard]

Marketsurfer: What do you mean “third party administrator.”

Aususilovic: What is Bear looking for? Legal action?

 

[ASusilovic]

Quote from jasonleonard:

Marketsurfer: What do you mean “third party administrator.”

Aususilovic: What is Bear looking for? Legal action?

Legal action ? No, no....=>http://www.nypost.com/seven/12032007/business/crushing_bear_hug_for_hedge_honcho_396689.htm


By the way, to speak in Risk / Reward Ratio :

Cioffi´s Risk = High-Grade Structured Credit Strategies Enhanced Leverage Fund

Cioffi´s Reward = new 150 - 250 million hedgefund

 

[marketsurfer]

Quote from jasonleonard:

Marketsurfer: What do you mean “third party administrator.”

funds utilize third party administrators-- the statements go directly to the TPA's-- the performance is determined and sent to the investors. making it very difficult for any shenanigans on the fund manager's part. here' s an example of how it works:

http://www.viteosfundservices.com/services_fundadministration.php

surf

 

[jasonleonard]

Aususilovic: Thanks for the link

Surf: I gotcha. But isn't there are large failure in the system when someone like Amarenth looses 60% in a week?

 

[bt116]

From my experience (limited at just 2 1/2 years in the hedge fund world) traders tend to be like NFL coaches.....regardless of performance, they will always be able to get another job at another shop. Unlike NFL coaches (whose performance is public knowledge) traders get the added safety net of not having to reveal their poor performance (since its such a secret world).

the key seems to be to make sure you move on prior to your current employee firing you.

even better yet.....some guys see their impending doom coming and leave right before their books blow up!

 

[marketsurfer]

Quote from jasonleonard:

Aususilovic: Thanks for the link

Surf: I gotcha. But isn't there are large failure in the system when someone like Amarenth looses 60% in a week?

no.

it's just a fraud prevention measure, loses are part of the game.



remember, the street is very forgiving to loses.

surf