One Year Ago »» The Securities and Exchange Commission charged two Sarasota, Florida-based investment advisers for their role in a hedge fund fraud. Neil Moody and son Christopher were charged with misleading investors about the financial condition of three hedge funds they claimed to manage (they overstated their value by nearly $160 million). The funds, Valhalla Investment Partners, the Viking IRA Fund and the Viking Fund, were actually managed by business partner Arthur Nadel, who was ultimately sentenced to 14 years in prison in October 2010 for a $168 million Ponzi scheme related to those and other funds.
The Moodys would settle with the SEC in April 2010, agreeing to a bar from associating with any investment adviser (without admitting or denying the allegations) although penalties and disgorgements are still possible, according to Compliance Reporter.
»» Bill Kaye, founder of The Pacific Group in Hong Kong, predicted gold would double in price in 12 months. Kaye went so far as to say gold—then at around $1,100 an ounce—could hit $5,000 in the next few years, citing the U.S.’s deficit and low interest rates. “The United States is going down the slippery slope of Zimbabwe,” he said. After all, his $100 million Greater Asian Hedge Fund was roughly 60% invested in gold.
Gold indeed rose, but did not double. The precious metal now trades near $1,375 an ounce after briefly crossing $1,400 in late 2010. The Greater Asian Hedge Fund gained 9.12% in 2010, according to the firm, less than its sparkling 39.78% net return in 2009. The fund maintains a roughly 60% position in gold today, still believing the price will rise.
Five Years Ago
»» Art Samberg’s more than $7 billion Pequot Capital Management planned to roll out an event-driven offering. The Pequot Event Driven Fund, run by Steve Pigott, planned to hold between 20 and 40 positions, investing in merger arbitrage, spinoffs, exchange offers, non-bankruptcy restructurings and post-bankruptcy equities. Capacity was said to be $500 million.
Pequot, of course, would fall. The firm announced in May 2009 that it would shut down because of an SEC investigation into alleged insider trading of shares of Microsoft by Samberg. Pequot had initially withstood an SEC investigation, but poor returns, a Congressional inquiry into political influence involving then-chairman John Mack, and ultimately the reopening of the case by the Commission spelled the death knell for the venerable money manager and his firm. In May 2009, Samberg and the firm paid $28 million settle the insider trading charges (the firm neither admitted nor denied wrongdoing).
»» Diamondback Capital Management planned to double its staff and expand its trading strategies. The firm hoped to have its new talent in place by March 2006, at which point the firm would reopen its flagship fund to an undisclosed amount of new capital.
Diamondback did grow to 135 investment professionals in parallel with increasing its assets under management from $600 million in 2006 to $5.8 billion as of November 2010. That rise came partially because of large investments from some of the country’s largest public pensions.
The firm was recently raided as part of the government’s recent insider recent trading investigation, but was quick to clarify it was not the target of an investigation. “Diamondback is not alleged to have engaged in any misconduct or wrongdoing,” said a letter sent to investors from November 29, 2010 and obtained by AR. According to the letter, the search warrant received by the firm appeared to be focused on a single employee (a portfolio manager now placed on leave), as well as on a former employee who reported to that employee. A spokesperson for Diamondback declined to comment.
