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Ritchie Capital Management

2008-07-01

Count of distinct funds: 1
Capital base: $4B (at peak in 2005)
Loss: down to $2B now (loss vs. redemptions unknown)

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stories: reuters.com, wsj.com

The troubled fund outfit run by A.R. Thane Ritchie has barred the door to withdrawals, reports Reuters (channeling the WSJ). From the article:

Ritchie told the Wall Street Journal that keeping his investors' money in the fund is the best move right now, since the alternative is to sell securities at "fire-sale prices".

I'm sure some of those investors are thinking they'd like to fire-sale some assets before competitors start doing it.

If Ritchie doesn't go looking for trouble, trouble certainly seems to find it. Just in the past year the fund has been involved in a bevvy of convoluted scandals:

  • Ritchie was fined $40M by the SEC for late-trading. Ritchie had gone as far as forging orders to back-date them to before 4pm. (The late trading took place between 2001 and 2003, at least as far as the SEC knows).
  • Two other fund outfits, Benchmark Plus Management, and Sterling Asset Management sued Ritchie over its management of a fund (Ritchie Multi-Strategy Global fund) in which all three invested.
  • Ritchie then counter-sued Benchmark for various aspects of breach of contract, which prompted the latter fund to drop its own case. (We don't know what happened to Sterling).
  • Ritchie sued Coventry First, an insurer, over fraud in investments undertaken with Ritchie. Claiming $700M in damages, Ritchie invoked RICO. Coventry was already fending off a suit begun by New York Attorney General Eliot Spitzer. Still, Coventry considered the Ritchie suit "a cheap publicity stunt."
  • Oh, we're not done yet. An investor in the above Coventry deal through Ritchie, Huizenga Managers Fund, sued Ritchie over its management of the insurance fund, saying the fund was misrepresented to them, and may be a total loss (Huizenga is still waiting to get its $10M back).

One of these articles also points out even earlier Ritchie drama:

The Geneva, Ill.-based hedge fund has been awash in bad news for much of the last year, shuttering its energy hedge fund at the same time Amaranth Advisors went under, spinning off its global macro fund and selling its flagship multi-strategy fund. Now, the firm is accusing a life insurer of fraud, seeking over $2 billion in damages.

Good grief.

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Comments:

Krellan at 05:30 2008-07-02 said:
http://online.wsj.com/article/SB121495893887021511.html

Here's what appears to be a long narrative story about an imploded hedge fund, Ritchie Capital Management, #3 on the list. Unfortunately I don't have a WSJ subscription, so can't see the entire text. Permalink

Aaron at 19:29 2008-07-05 said:
Here's a free blurb:

http://www.reuters.com/article/email/idUSN0130700420080702

I am researching them for an ailing post so I will post more if I find anything.

Interestingly, Ritchie was fined $40M earlier in the year by the SEC for illegal "late trading"

http://www.sec.gov/news/press/2008/2008-10.htm Permalink

Aaron at 19:59 2008-07-05 said:
admin note: I've merged this topic into the "official" Ritchie (autopost) topic, appearing on the new ailing entry I just put together (see link at the top of this topic). Permalink
Cheetah at 01:21 2011-01-28 said:
hi,.. Ritchie Capital Management, L.L.C. is an alternative asset management firm with interests in private equity, venture capital, real estate, energy, and insurance. Ritchie Capital has several locations, including offices in Wheaton, IL, New York, NY, and Menlo Park, CA.

thanks,.. Permalink

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Important: This fund is on our list of hedge funds that are apparently ailing or which we think are worth watching for any other reason. Ailing funds haven't shut down, but they've suffered significant value declines and/or temporarily halted redemptions. Funds on watch may not even have unusual declines, but may be posted if it is felt there may be risk of developing a more serious condition eventually.