GSC Trustee Settles With SEC

Jun 23 2011 | 2:19pm ET

Bankrupt hedge fund GSC Group’s federal trustee has reached a settlement with the U.S. Securities and Exchange Commission over its marketing of collateralized debt obligations that defaulted in 2008.

GSC filed a motion in Manhattan on Tuesday asking a U.S. bankruptcy judge to approve the SEC accord. Under the terms of the deal, GSC would pay no monetary damages. In a settlement announced the same day, JPMorgan Chase & Co. agreed to pay $153.6 million to end an SEC lawsuit over the CDOs.

At the heart of the settlement is an investment called Squared CDO, managed by GSC. The regulator says GSC did not “adequately inform” investors that the hedge fund—Magnetar—that helped pick the CDOs for the portfolio had also made a $600 million bet the securities would decline in price. Court papers show that when the CDOs defaulted in January 2008, investors lost most of their money.

A hearing will be held on July 13 to approve the settlement.

In Depth

Financial Industry Blockchain Consortium R3 To Open-Source Platform Code

Oct 20 2016 | 9:03pm ET

Bitcoin's blockchain technology has spawned a flurry of activity among fintech startups...


U.S. Trust's Beard: The Rapid Growth of the Art Lending Industry

Oct 7 2016 | 10:55pm ET

Alternative investment managers have emerged as some of the most significant art...

Guest Contributor

Hedge Fund Marketing – Tips for Your Initial Sales Meeting

Sep 29 2016 | 5:46pm ET

There are two main goals a hedge fund should have for an initial in-person sales...