WEST PALM BEACH, FL (HEDGECO.NET) – The Securities and Exchange Commission [SEC] has cleared the Clinton Group, of any wrongdoing in the mutual fund pricing scandals of late 2003. The conclusion wasreached following a 7-month long investigation of the hedge fund group. The damage has already been done as the hedge fund manager saw significant asset withdrawals from its managed portfolios sincelast October when the allegations surfaced.
Meanwhile, investors pulled out significant assets from the firm, as its management assets declined from about $5.5 billion total from its six hedge funds last year, to about $1.4 billion. One of Clinton hedge funds, its flagship Trinity Fund, closed after it suffered a 21.5% loss in 2003. According to news reports, the company still has billions of assets in its collateralized and largely illiquid debt obligations.
The asset manager has also lost some of its managers following the alleged wrongdoing. Earlier in April, the company announced that Rishin Roy, Thomas Schnepp, and Seth Fischoff had departed from the firm.
The allegations began with the sudden resignation of senior trader Anthony Barkan. According to his resignation papers, Barkan said he was concerned with securities� valuation strategies relating to pricing in some of the firm�s bond portfolios. The Securities and Exchange Commission and the Commodities and Futures Trading Commission subsequently began their investigations soon after such revelations.
George Hall, president of Clinton, in a letter to investors, described the period as the �toughest in this firm’s history.� He said, �We believe the facts and our total co-operation with regulators and auditors led them to proper conclusions that these matters should be put to rest with no action against the Clinton Group. In our view, the claims by a former employee were baseless and factless and we are happy to put the matter behind us,� Mr. Hall added.
According to published reports, the Clinton Group has had a good year to date in performance terms, regardless of such set back. Its $700 M multi-strategy vehicle has gained 4.8 percent, year-to-date, while its $90 M convertible portfolio has gained 4.09 percent as well. It remains to be seen if some of the investors who panicked and withdrew their assets from the Group will return, following the clearance from government regulators.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: [email protected]
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