Tuesday, 28 February 2017
Last updated 11 hours ago
Jan 16 2014 | 1:08pm ET
Another scandal-tarred hedge fund is becoming a family office.
Common Sense Investment Management will return what's left of its clients assets and will manage firm founders' James and Janet Bisenius' wealth. Investors have been fleeing the Portland, Ore.-based fund of hedge funds in the wake of James Bisenius' arrest in a prostitution bust in August.
Common Sense had about $3.2 billion in assets at that time, but was left with less than $150 million at the end of the year.
According to the Portland Business Journal, Common Sense cut "generous" severance checks to employees laid off after the decision, and has worked to find new jobs in the hedge fund industry for those being let go. Common Sense employed about 30 people prior to the scandal; it is unclear how many will remain, or whether the firm will retain the Common Sense name.
Common Sense initially sought to distance itself from Bisenius' arrest. While it said he would be retained as CEO and chief investment officer, the firm insisted that Bisenius' "personal transgression bears no reflection on this outstanding team of professionals or the quality of portfolio management." But some clients questioned that quality, noting that the firm's returns had sagged and that two top portfolio managers left the firm last year.
Bisenius was arrested in a Portland suburb after responding to an online prostitution ad—one posted by the police.
Common Sense's shift to a family-office structure follows a similar move by SAC Capital Advisors, which is returning all outside capital following its guilty plea to insider-trading charges.