Magnetar Sued Over CDO

Apr 9 2012 | 11:18am ET

Magnetar Capital has had its name dragged through the mud over the $30 billion in collateralized debt obligations it was involved with prior to the financial crisis, but it has never been formally accused of wrongdoing. Until now.

The hedge fund was sued by Italian bank Intesa Sanpaolo, accusing it and Crédit Agricole of fraud over a 2006 CDO. Intesa claims that it lost $180 million after CA's Calyon unit convinced it to invest in the CDO, Pyxis ABS CDO 2006-1.

That CDO was a "scheme designed by Magnetar," the complaint alleges. "Calyon collected fees on the deal and, through the Pyxis swap, shifted losses on the CDO which it would have otherwise borne itself."

Evanston, Ill.-based Magnetar has previously been named in lawsuits and investigations which claim it helped select the securities that went into CDOs structured by banks. But those probes and claims have focused on the banks, and their alleged failure to disclose the hedge fund's role. Magnetar has denied playing a crucial role in asset selection.

Putnam Advisory Co., the independent firm hired by Calyon to select the securities in Pyxis, was also named in Intesa's suit.


In Depth

JOBS Act Propels Real-Estate Crowdfunding Platform

Oct 21 2014 | 2:57am ET

If D.J. Paul were a real estate development, he would be described as “multi-use...

Lifestyle

Strippers Accused Of Robbing Hedge-Fund Manager Face Jail

Oct 20 2014 | 9:20am ET

A group of alleged stripper-thieves—whose victims include a hedge-fund manager...

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.