Magnetar Rejects SEC’s Take On CDO

Jun 22 2011 | 10:19am ET

In the now-settled matter of Securities and Exchange Commission v. JPMorgan Chase, Magnetar Capital would like to politely agree to disagree.

The hedge fund, which the SEC said “heavily influenced” the selection of securities for the collateralized debt obligation—allegedly structured at its behest—at the heart of its case against JPMorgan, “respectfully [stands] by our prior statements on these topics,” which amount to a denial that Magnetar had much to do with the CDO at all.

“We did not control the asset-selection process and our Mortgage CDO investment strategy was designed and implemented to maintain a market-neutral portfolio,” the hedge fund said in a statement.

Magnetar was never accused of any wrongdoing in the case, and says it never will be: “The SEC Staff issued a closing letter to Magnetar stating that it does ‘not intend to recommend any enforcement action’” against the hedge fund, its funds or staff, Magnetar said in its statement.

JPMorgan yesterday agreed to pay $154 million to settle the SEC probe of the $1.1 billion “Squared” CDO. The SEC charges that it misled investors in a complex mortgage securities transaction just as the housing market was starting to plummet. Under the settlement, harmed investors will receive all of their money back.


In Depth

Q&A: Jeff Eaton Talks Capital Raising, CalPERS And The Secondaries Market

Oct 14 2014 | 10:16am ET

Global placement agent Eaton Partners has raised close to $60 billion for some of...

Lifestyle

MacDonald-Korth Offers Insights Into Paintings Bought, Sold By Hedgies

Oct 7 2014 | 9:00am ET

Definitive and complete ratings require an in-person examination of an artwork,...

Guest Contributor

PAAMCO: European Equity Exposure - Challenging Year, But All is Not Lost

Oct 16 2014 | 4:12am ET

European equity hedge fund managers have had a tough time so far this year. The...

 

Videos

Editor's Note

    Must Attend Hedge Fund Charity Events For October

    Sep 30 2014 | 9:29am ET

    The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…

 

Futures Magazine

October 2014 Cover

Deeply flawed risk benchmark

Most traders agree that proper risk management is the key to successful trading. However, many traders depend on the deeply flawed measure of standard deviation as a benchmark of risk. Here we put it ...

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.