Plainfield Hit By Overvaluation Allegations

Aug 18 2010 | 2:02pm ET

Plainfield Asset Management certainly didn’t need any more bad news, but it got some earlier this month, in the form of a whistleblower lawsuit accusing it of defrauding investors.

The Stamford, Conn.-based firm—Plainfield moved from its former Greenwich digs to its former disaster recovery space earlier this year—inflated the value of its portfolio to allow it to collect higher fees from clients, according to an Aug. 6 letter to Securities and Exchange Commission Chairman Mary Schapiro. The lawsuit was filed on behalf of the would-be whistleblowers by lawyer Stuart Meissner.

Plainfield and founder Max Holmes “have knowingly and intentionally defrauded its own investors… through the fraudulent overvaluation of its own assets under management,” Meissner’s letter alleges. Some of the hedge fund’s assets are valued “in excess of their true value, enabling Plainfield to defraud its own investors by unlawfully charging higher management fees than those which it is in fact entitled to.”

The whistleblower suit was first reported by the New York Post.

The allegations of valuation inflation come amidst a pair of investigations into alleged predatory lending by the hedge fund, from both the Manhattan District Attorney’s office and Connecticut Attorney General’s office.

Plainfield has denied the whistleblower charges, calling them “without merit.”

“Our valuation policies and procedures have been scrutinized by not only Duff & Phelps, PwC and Deloitte, but also by our regulators,” Thomas Fritsch, the hedge fund’s general counsel, said.


In Depth

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.