After a 22-year reign as manager over “one of the world’s biggest and most successful funds,” the handing back of outside investor capital and revamping as a family fund must have been a difficult move for the Stamford, Connecticut-based hedge fund mogul. But that was the cost of settling and moving past Department of Justice (DOJ) investigations and the companys indictmentfollowed by the entry of guilty pleasall related to insider trading charges. Now it appears that after just five months on the sidelines, the highly successful hedge-fund manager may be maneuvering to get back into the good graces of the Securities and Exchange Commission (SEC) and back in the game.
Wealthiest ClientsHighest Fees
The antecedent trading firm was comprised of a large group of hedge funds and was known for attracting some of the wealthiest investors to be foundand also for assessing the highest portfolio management fees in the business. Between its founding in 1992 and its bowing out of the public investor arena in March 2014albeit under SEC pressure to do sothe firm accumulated over $14 billion in assets under management (AUM) and yielded returns that made it the most successful hedge fund on record: annual returns averaged 25% after fees.
Success Brings Scrutiny
The success of the company not only dazzled the financial world but also attracted the attention of regulators who began investigating the company in 2007. In the fall of 2010, the SEC conducted raids of the firms offices, which ultimately resulted in the 2013 indictments of several former employees. Altogether, eight former employees were found guilty either by way of plea or trial, yet the hedge-fund manager himself avoided indictment. The firm was not so lucky, and in July 2013, the SEC filed a civil suit for failure to properly supervise employees, and the DOJ filed a criminal indictment alleging securities fraud and one count of wire fraud. Four months later, the firm decided to plead guilty to all counts and agreed to cease managing the funds of outsider investorsand to pay a $1.8 billion fine.
A Comeback Bid
The agreement to manage only family investmentsplus those of a few approved employeesmeant that the AUM dropped from $14 billion down to around $9 billion. While still a respectable amount, apparently something was missing: the fund manager recently hired a top-notch lawyer to fend off the SECs intended lifetime bar from handling outside investor funds, and his company has parted ways with staff members who were tainted with the problems of the previous incarnation. It remains to be seen whether he can return to the good graces of regulators.
David draws on 20+ years’ experience in both legal practice and in business services delivery since his own call to the Bar in 1989. With several years in the startup environment, including as a co-founder in the legal tech space specifically, he brings a unique and timely perspective on the role of data, automation and artificial intelligence in the modern and efficient delivery of services for legal consumers. Having been both a corporate buyer of legal services and a services provider, he identifies the greater efficiency and value that can be achieved in legal operations for corporate buyers especially.
An attorney, David worked for law firms Pinsent Masons and Linklaters in London before moving to New York to join Credit Suisse. As CAO, he helped negotiate & execute the relocation of Credit Suisse into its new NYC global HQ. Subsequently, David directed major global outsourcing, shared sourcing, HR operations & process efficiency initiatives including the digitization of records, the global roll-out of PeopleSoft HRMS & Y2K. David has worked extensively in the UK, US, Philippines, India and China markets in the areas of data management, human resources and business process outsourcing.
Most recently, David has been successfully investing in and serving as an advisory board member of several legal services start-ups including a cloud-based solution for legal process automation and e-filing; and a technology solution for large-scale capture of court and other public data used for litigation analysis, among others.
David graduated from the University of Manchester with Honors in Law and Bar School (College of Legal Education) in London, and has been a member of Middle Temple since 1989. He is the founder and former Chairman of The Global Sourcing Council.
Member: Bar of England & Wales, ABA, NYCBA, ACC, DRI