WEST PALM BEACH, FL (HEDGECO.NET) – Clinton Group is currently in talks with the remaining investors in its troubled hedge fund, the Trinity hedge fund. Such talks are centered on the issue ofwhether the fund should still remain open or be closed. The Trinity fund, the flagship vehicle of Clinton Group, suffered significant losses following the resignation of the former fund manager,Anthony Barkan.
Two other prominent portfolio managers left Clinton last summer, problems began when senior trader Anthony Barkan quit in October, in his resignation letter, and Barkan raised his concerns about security valuations in fund. The firm remains under investigation by the Securities and Exchange Commission.
The Trinity fund lost about US$900 million last year through a 21.5% trading loss and the following stampede of investor withdrawals. The firm is in the process of deciding whether to change the fund�s investment guidelines or to change the fund�s focus to allow it to invest in other assets. Some investors in the Clinton’s hedge fund said the firm had not notified them of the decision about the predicament of the fund, they further said the firm is no longer forthcoming with information following the troubles of the fund.
A source familiar with the situation said Trinity’s remaining investors would have the option of putting their money in the group’s five remaining hedge funds; however those funds have different trading strategies. Those remaining funds invest in a mix of mortgage-backed, commercial mortgage-backed and asset-backed securities, Global Fixed Income Fund and the Clinton Multistrategy Fund.
Departing investors would still pay a 5% penalty if they pull their money out. Hedge funds with sustained losses often have no better choices than to fold up, because through hurdle rate provision, managers of such funds would wait for the fund to reach its previous level, before they may start to collect new performance fees Clinton Group is a Registered Investment Adviser headquartered in New York City. Founded in 1991, the firm manages over $6.18 billion for accredited domestic and offshore clients, including high net worth individuals, banks, insurance companies, pension funds, and public funds.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
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