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This was not a hedge fund, it was a family office, a vehicle he chose after his last hedge fund blew up in 2013 and he was fined for fraud. He chose a family of

This was not a hedge fund, it was a family office, a vehicle he chose after his last hedge fund blew up in 2013 and he was fined for fraud. He chose a family office probably because the disclosure requirements are not as arduous as hedge funds, then he lied to lots of banks about his exposure to ramp his own stocks multiple times by buying on margin with multiple partners, till it seems the banks found out and the last banks out were left holding the bag. Classic doubling down on failed leverage and classic signs of the massive bubble in financial assets about to implode.

paulpauper 5y ago
People have been predicting bubble and crisis and collapse for a decade to no avail. large companies, especially in tech,are generating record profits and earnings. Hedge fund and trader blow-ups happen in good times and bad. This guy had no idea what he was doing. This is not an indictment on the US economy or financial system.
- deleted 5y ago
  [deleted]
- enkid 5y ago
  The last crisis happened a little less than a decade ago, and crisises happen way more often than you seem to realize. 2008, 2001, 1987, 1973 all saw crashes due to some sort of crisis. It seems to happen about once a decade now. There was a period between 1929 and 1973 when they were less common, but before that, they seemed to happen at about that frequency as well.
  - majormajor 5y ago
    If you subscribe to a time-period thing, I guess a lot depends on how you look at the 2020 market fall and recovery... was it too fast to count??
    - enkid 5y ago
      I don't think it's related to a time period, more just random external factors. Obviously, there has to be some periodicity because a there's no such thing as a back to back crash, it would just bigger crash, but I don't think there's evidence that the market will have a done year every 8-12 years.
dopamean 5y ago
This distinction between hedge fund and family office is of no use here. His fund was only a family office in that it didn't take money from investors. It operated just like a hedge fund and was not free of any rules that would have prevented this loss from happening had it been officially recognized as a hedge fund.
- valuearb 5y ago
  By your definition a retail investor is no different than a hedge fund.
- grey-area 5y ago
  There is less oversight for family offices isn't there? The SEC is thinking of introducing more regulation as a result of this on both HFs and FOs. Perhaps you are saying swaps or other instruments he used are not regulated anyway even for HFs, but perhaps they should be? I find it suspicious that he went from fraud in a hedge fund Tiger Asia involving manipulated prices and insider trading (for which he was convicted) to a less regulated family office using things like swaps which avoid oversight, and which he then proceeded to blow up with excessive leverage (and possibly other illegal shenanigans to manipulate prices), using instruments which avoid oversight on stock positions, most likely using leverage he obtained by lying to banks about his exposure - I sincerely doubt the multiple brokers were aware of just how much exposure he had and how concentrated it was, and they all raced to call it in when they found out. I'd be very surprised if there were no illegal activity there which would not have been caught by increased oversight, though of course it is now in nobody's interest to look into that too closely.

paulpauper 5y ago

People have been predicting bubble and crisis and collapse for a decade to no avail. large companies, especially in tech,are generating record profits and earnings. Hedge fund and trader blow-ups happen in good times and bad. This guy had no idea what he was doing. This is not an indictment on the US economy or financial system.

deleted 5y ago
[deleted]
enkid 5y ago
The last crisis happened a little less than a decade ago, and crisises happen way more often than you seem to realize. 2008, 2001, 1987, 1973 all saw crashes due to some sort of crisis. It seems to happen about once a decade now. There was a period between 1929 and 1973 when they were less common, but before that, they seemed to happen at about that frequency as well.
- majormajor 5y ago
  If you subscribe to a time-period thing, I guess a lot depends on how you look at the 2020 market fall and recovery... was it too fast to count??
  - enkid 5y ago
    I don't think it's related to a time period, more just random external factors. Obviously, there has to be some periodicity because a there's no such thing as a back to back crash, it would just bigger crash, but I don't think there's evidence that the market will have a done year every 8-12 years.

dopamean 5y ago

This distinction between hedge fund and family office is of no use here. His fund was only a family office in that it didn't take money from investors. It operated just like a hedge fund and was not free of any rules that would have prevented this loss from happening had it been officially recognized as a hedge fund.

valuearb 5y ago
By your definition a retail investor is no different than a hedge fund.
grey-area 5y ago
There is less oversight for family offices isn't there? The SEC is thinking of introducing more regulation as a result of this on both HFs and FOs. Perhaps you are saying swaps or other instruments he used are not regulated anyway even for HFs, but perhaps they should be? I find it suspicious that he went from fraud in a hedge fund Tiger Asia involving manipulated prices and insider trading (for which he was convicted) to a less regulated family office using things like swaps which avoid oversight, and which he then proceeded to blow up with excessive leverage (and possibly other illegal shenanigans to manipulate prices), using instruments which avoid oversight on stock positions, most likely using leverage he obtained by lying to banks about his exposure - I sincerely doubt the multiple brokers were aware of just how much exposure he had and how concentrated it was, and they all raced to call it in when they found out. I'd be very surprised if there were no illegal activity there which would not have been caught by increased oversight, though of course it is now in nobody's interest to look into that too closely.