Monthly Archives: August 2016

Partners Hedge Fund Investigation

images-27The Platinum Partners saga may have further twists in store.

The New York-based hedge fund has begun liquidating its funds, after the firm’s longtime associate Murray Huberfeld was accused last month of arranging for a $60,000 kickback to be delivered — in a Salvatore Ferragamo bag — to a correctional officers’ union official in exchange for directing the union’s retirement fund investments to Platinum.

Now, Platinum and its chief investment officer, Mark Nordlicht, may face scrutiny as the probe widens, according to a report from the Wall Street Journal.

Platinum’s woes began with the June 8 announcement of bribery charges against Huberfeld and Norman Seabrook, president of the New York City Correction Officers Benevolent Association.

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Prosecutors say that Huberfeld, through an intermediary, arranged for the delivery of the kickback to Seabrook after the union official directed $20 million in union investments into the Platinum Partners Value Arbitrage Fund. Huberfeld then arranged for the hedge fund to reimburse the intermediary for the kickback using a fraudulent invoice for the purchase of New York Knicks basketball tickets, the U.S. Attorney’s Office said. Both Seabrook and Huberfeld pleaded not guilty to the charges on Friday.

The fund itself had not been implicated in the criminal case against Huberfeld, whom prosecutors describe as a co-founder and manager at Platinum, claiming he was not listed on the firm’s registration documents to avoid scrutiny. Huberfeld has been previously fined by the Securities and Exchange Commission.

Federal agents raided Platinum’s office in late June, after the charges were announced, as part of an investigation that’s reportedly separate from the bribery case. And there are other rumblings of wider fallout.

Drastic Restructuring as Profit Falls

Deutsche Bank  (DB) CEO John Cryan said the bank may need to step up its restructuring program as it reported a 98% decline in quarterly net profit to €20 million ($22 million).

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Germany’s leading lender said it has already arranged to cut 3,000 jobs in its home market, pour its U.S. operations into an intermediate holding company and to separate retail lender Postbank, which it wants to partially spin off next year. The company delivered the update as it announced a 20% decline to €7.4 billion in quarterly revenue, which it said reflected a “challenging environment and strategic decisions.” Its core equity Tier One ratio rose to 10.8% from 10.7%, in line with expectations, while the €20 million net profit figure was below the €22 million consensus in a Bloomberg forecast.

“While our results show that we are undergoing a sustained restructuring, we are satisfied with the progress we are making,” said Cryan. “We have continued to de-risk our balance sheet, to invest in our processes and to modernize our infrastructure. However, if the current weak economic environment persists, we will need to be yet more ambitious in the timing and intensity of our restructuring.”

Deutsche Bank shares closed down 1.9% at €12.88. They have lost 57% of their value in the past year.

We’ll have a full story later.