The Morning Brief: Platinum Partners Exec Charged with Fraud

A hedge fund executive has been criminally charged in connection with a widespread fraud involving union officials in New York. Murray Huberfeld, a founder and part owner of Platinum Partners, was charged with committing wire fraud after allegedly paying a $60,000 bribe to Norman Seabrook, who has been president for more than 20 years of Correction Officers’ Benevolent Association (COBA), New York City’s largest correction officers union and the largest municipal jail union in the United States, according to the United States Attorney for the Southern District of New York and the FBI.

According to the government, in exchange for the payment Seabrook agreed to invest $20 million of COBA’s money in Platinum’s hedge funds. In late 2013, on a trip to the Dominican Republic, Seabrook told an unnamed cooperating government witness that he worked hard to invest COBA’s money and it was time that “Norman Seabrook got paid,” according to the government.

The cooperating witness is described in the announcement as having done business with Huberfeld, who was looking to diversify from Platinum’s base of high net-worth individuals to attract public and institutional investors. According to the announcement, Huberfeld planned to pay Seabrook between $100,000 and $150,000 per year, figuring it would come from a pool of profits. Seabrook and Huberfeld were each charged with one count of conspiracy to commit honest services wire fraud and one count of honest services wire fraud. Each of the two counts carries a maximum term of 20 years in prison. Platinum specializes in asset-based lending. According to a recent profile by Reuters, the firm managed $1.35 billion. Last year its two main funds were up between 9 percent and 10 percent, according to Reuters.


Maglan Capital has called on FairPoint Communications to put itself up for sale and to launch a share repurchase program in order to boost the stock price of the provider of telecommunications services. The little-known New York activist firm initially invested in the Charlotte, North Carolina company when it filed for bankruptcy in 2009.

“There is a serious discrepancy between FairPoint’s improved balance-sheet, operating performance and prospects…and its current market valuation,” Maglan, which owns 7.5 percent of the shares, says in a letter to FairPoint’s board. The investor blames the discount on the board’s “failure” to “protect and enhance shareholder value.” The stock Wednesday jumped 3.6 percent after rising more than 1 percent on Tuesday.


Stifel Nicolaus cut its price target on Valeant Pharmaceuticals International from $65 to $55 after the embattled drug maker aggressively pared its guidance for 2016. In a note to clients, the bank stresses its new 12-month target price is based on its revised sum-of-the-parts (SOTP) analysis. It explains that it applies enterprise values-to-cash flow multiples of as low as 7 times for Valeant’s “eroding generic-like businesses,” 8 times for the international business, 10 times for the company’s branded prescriptions and as high as 14 times for what it calls “a sustainable Opthalmology business.” Stifel’s valuation is also net of nearly $30 billion in debt for 2016. Shares of Valeant fell nearly 3 percent on Wednesday to close at $23.92, a new low.


BlueMountain Capital Management disclosed it owns 7 million of CF Corporation, or 11.7 percent of the a blank check company formed by executives from Blackstone and title insurer Fidelity National Financial Inc. (FNF) and which went public in late April.