Losing The Crown

Written by Dimitry Uviski

SLIPPING HALO?

Is all well at the Court of King Louis?

Is Hedge-fund King Louis Bacon’s halo beginning to slip?  

In the first half Of 2011, Bacon’s flagship Moore Global Fund was down 5% according to various well-informed. news reports. Back in May it was further reported that Moore Capital had been displaced in the TOP 20 biggest world hedge funds. In the same month American insurance giant A.I.G. filed a law suit against  ICP Asset Management and Moore Capital. According to the New York Times A.I.G. which is now mostly owned by the US taxpayers “suffered losses while insuring mortgage securities created by ICP. The suit says ICP manipulated those securities in a way that benefited itself and Moore Capital.” Although the main thrust of the suit is aimed at ICP it also argues that Moore Capital should repay any gains it made from dealing in the alleged suspect securities.

In March Bacon had been embarrassed when news leaked out that despite his opposition on supposed environmental grounds to a proposed Xcel transmission line over his 171,000 Colorado ranch, his own hedge fund had a near $60m stake in Xcel. Moore Capital owns 2,300,00 shares in the utilities company. Invited by the Denver Post to defend his position, Bacon wrote: “The transmission line is an unnecessary white-elephant project that will generate hundreds of millions in profits for Xcel’s owners while sticking ratepayers for the bill”.

Perhaps more worrying for investors has been the succession of regulatory issues and

concerns that have been highlighted over the last 2 years.

 

• In April 2010 Moore Capital in New York paid $25m to settle charges by the Commodities Futures Trading Commission alleging that a former manager had attempted to manipulate platinum and palladium prices in 2007 and 2008. As part of the settlement Moore Capital had its registration as commodity pool operators and commodity trading advisors restricted for 3 years.

 

• In March 2010 the Financial Services Agency and Serious Crime Agency of the UK raided Moore Capital’s Curzon Street Headquarters and arrested Julian Rifat a trader at the firm on suspicion of  being involved in a widespread insider-dealing ring. The case has not yet come to court.

 

• In September 2008, Steven Harrison a former top Moore Capital trader in London paid a $78,000 fine to the FSA to settle a market abuse investigation.