Hedge Fund Platinum Partners to Pay Back Fraction of What Firm Owes
The hedge fund is under federal fraud investigation
Hedge fund Platinum Partners plans to pay back around $80 million to investors in the coming months, less than 10% of what the firm owes in total, according to people familiar with the matter.
Platinum, whose practices are the subject of a federal investigation, as of this summer said it had $1.25 billion under management.
Its executives, as recently as this month, continued to tell investors they hope to return the entirety of that sum over time, though they haven’t said exactly when they will do so.
Bernard Fuchs, one of the firm’s co-owners, will likely be among those paid first, the people said. Mr. Fuchs, 70 years old, had requested last year to pull some of his money even as he encouraged other investors to stay put, the people said.
Mr. Fuchs said he requested the money back “for charitable donations” connected to his foundation. He said the withdrawal constituted “a fraction of my money in the fund.”
Platinum’s first planned repayments to investors come as federal investigators conduct a fraud probe focused on Platinum, which had reported some of the most consistent returns in the hedge-fund industry. In addition, in June, Platinum co-founder Murray Huberfeld was arrested for his role in the alleged bribery of a New York City Correction Officers’ Benevolent Association official in exchange for an investment. Mr. Huberfeld and the union official denied wrongdoing.
That same month, Platinum announced it would suspend all redemptions and move to liquidate. The firm has said it is cooperating with all investigations.
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