Zwirn Returns With Closed-End Fund

May 19 2011 | 1:45pm ET

Daniel Zwirn won't be fooled again. Three years after shuttering his D.B. Zwirn & Co. as investors fled in the wake of an accounting scandal, the hedge fund manager is back with a new fund that won't be subject to the slings and arrows of outrageous redemptions.

Zwirn and private equity honcho Alan Gordon of Richland Gordon & Co. have gone into business together, founding p.e. shop Alda Capital in Chicago, Bloomberg News reports. That firm owns Alda Capital Management, the investment adviser for a new closed-end fund that will be co-managed by Zwirn.

The fund will employ a strategy similar to the late D.B. Zwirn Special Opportunities Fund, lending to small- and mid-cap companies, Alda Capital said in a regulatory filing.

Zwirn, who once managed $4 billion, will have to make due with a much more modest sum this time around: Alda plans to raise about $50 million for the lending fund.

Zwirn pulled the plug on his hedge fund in 2008, after investors sought to withdraw half of their assets following the revelation of accounting irregularities. Zwirn himself was cleared of any wrongdoing, but former CFO Perry Gruss was charged by the Securities and Exchange Commission with misappropriating $870 million in client capital between 2004 and 2006.

Gruss denies the charges, saying he is being made a scapegoat for Zwirn.

Zwirn sought to launch a successor to D.B. Zwirn, called ZLC Global Investments, following the former firm's collapse, but the effort went nowhere.

Gordon will serve as chairman and CEO of Alda Capital Management, while he and Zwirn are co-managers of its parent firm, Alda Capital, founded last year. The two men and Lori Wittman serve as the new fund's investment committee, screening and approving investments.


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