Zwirn To Shutter Largest Funds

Feb 22 2008 | 10:40am ET

D.B. Zwirn & Co. will shutter its two largest hedge funds, as investors stormed the exits in the wake of an accounting scandal.

The New York-based hedge fund told investors that it would liquidate both the domestic and offshore versions of its Special Opportunities Fund, which together manage some $4 billion. Investors sought to redeem more than half that total, despite the fund’s strong performance; the onshore fund returned 11% and the offshore fund 7% last year.

Early last year, Zwirn told investors that it had uncovered improper accounting during its 2006 financial audit. An internal investigation turned up improper financial transfers and accounting of expenses, including those for founder Daniel Zwirn’s use of a private jet. According to the firm, it has resolved the issues that led to the problems and reimbursed investors, with interest.

The firm will reveal its plan for returning the assets next month. Published reports indicate that it could take as long as four years to liquidate the funds; some 60% of its assets are invested in illiquid securities, including private equity investments and debt-based derivatives.

Zwirn said it would continue to manage the $1 billion in assets that remain after the Special Opportunities liquidation.


In Depth

bfinance: Fees Falling Across Asset Classes, Yet Overall Investor Costs Still Climbing

May 16 2017 | 9:53pm ET

Despite unprecedented attention on fees, new research from investment consultancy...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Risk-Based Compliance: Why Oversight Of Outsourcing Is Critical

May 10 2017 | 7:02pm ET

Compliance is notoriously one of the trickiest middle office functions for funds...

 

From the current issue of