Saturday, 22 November 2014
Last updated 23 hours ago
May 13 2010 | 9:55am ET
A third Wall Street bank has entered negotiations with a collapsed Australian hedge fund over its losses in collateralized debt obligations.
Morgan Stanley and Basis Capital Management have entered into arbitration in London, the Financial Times reports. Basis accuses Morgan Stanley of selling off its CDOs at artificially low prices, helping push its Yield Alpha Fund into bankruptcy.
Morgan Stanley liquidated the fund’s CDOs—which it posted as collateral—after the hedge fund missed a margin call in 2007. But an expert witness for Basis said Morgan valued the CDOs at US$10 million to US$12 million less than they were worth.
Basis accused Citigroup of similarly undervaluing the CDOs it posted as collateral, eventually leading to a settlement that cut the amount Basis owed the bank by several million dollars, according to the FT. The hedge fund is also in settlement talks with Goldman Sachs, which structured a CDO that Basis lost US$56 million.
In an internal e-mail, a Goldman executive referred to the Timberwolf CDO in which Basis invested as “one shitty deal.”
Nov 4 2014 | 9:45am ET
Data management is important to every business, but for hedge funds, it is critical. FINalternatives recently asked Peter Sanchez, CEO of Northern Trust Hedge Fund Services, how fund managers can deal with the demands of managing data while at the same time remain transparent and abide by operational best practices. Read more…
Reg NMS created a huge bifurcation in equity markets and while much of what has followed has been positive, in terms of lower fees and greater liquidity, many traders would like to see the market come...