Hedge Fund Yorkville Got Bailout Loan

Sep 28 2010 | 12:19pm ET

A Jersey City, N.J., hedge fund under Securities and Exchange Commission investigation received more than $230 million in federal loans as part of a government bailout program.

Yorkville Advisors has been part of the Term Asset-Backed Securities Loan Facility Program since last year. Under TALF, the Federal Reserve Bank of New York has up to $1 billion to lend as part of an effort to inject liquidity into the ABS market.

Yorkville received some $233 million of that financing, using it to buy $253 million in securities last year for its flagship, YA Global Investments. The TALF deals were made via a subsidiary of the fund, New Earthshell Corp., and placed with a special-purpose entity called YA TALF Holdings, Forbes reports. The hedge fund still owes the Fed $162 million.

Yorkville said it “made the application to participate in the TALF program which included disclosure of participating funds, the interposed entities as well as providing all requested follow-up information. Yorkville and the participating entities were approved by the Federal Reserve Bank of NY as TALF-eligible participants.”

Until now, few of the hedge funds and other firms participating in TALF have been made public. That will change by the end of this year under a new law requiring disclosure of the program’s participants.

Last month, Yorkville told investors that the SEC had sought—and that it had provided—some information about the $864 million hedge fund. It did not say what the regulator had asked for.


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