This content is from: Portfolio

The Morning Brief: Citadel’s Security Pays Off

In “Flash Boys: A Wall Street Revolt,” author Michael Lewis makes a point to note that to gain entry inside hedge fund firm Citadel’s main offices, an employee must pass through up to five key-card entry points. The excess security struck Lewis as odd, but now, as two former employees face prison time for stealing trade secrets from the Chicago-based firm, Lewis may have to eat his words. Sahil “Sonny” Uppal, a former researcher with Kenneth Griffin’s firm, pleaded guilty to obstruction of justice yesterday, the Chicago Tribune reports. Another employee, Yihao “Ben” Pu, pleaded guilty just days before to stealing the data in 2011. The two hid stolen info, which included research on equity trading strategies Uppal had worked on, on computer drives at a friend’s house, before Pu discarded some into a canal. Authorities who recovered some files believed they pointed to a plan to launch a hedge fund in China. Uppal could serve up to 16 months.

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Ubiquitous hedge fund manager William Ackman reiterated his plans for an initial public offering of the Pershing Square Holdings fund in an investor letter, DealBook reports. The founder of New York-based Pershing Square Capital Management said in the letter that such an offering should occur “later this year.” Ackman, still in the midst of his ongoing feud with Herbalife, which he asserts is a Ponzi scheme, cited his ten-year track record, noting that initial investors in the fledging fund would have returned 627 percent to date.

In the same letter, Forbes reports, Ackman went off on a longtime foe, corporate lawyer Martin Lipton of Wachtell, Lipton, Rosen & Katz. Lipton, who is credited with creating the so-called poison pill, has spoken out against activist investors and drawn the scorn of rivals Ackman and Carl Icahn, who sits on the other side of Ackman’s Herbalife trade. Lipton is seeking changes to 13D filings, which investors must file after acquiring more than 5 percent of a company’s shares. Says Ackman: “Attempts by conflicted legal advisors to change the rules to benefit entrenched and underperforming managements put at risk our capitalist system and should be strongly resisted by investors.”

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Argentina has continued to blast U.S. Judge Thomas Griesa over his handling of the country’s bond default saga, Reuters reports. Griesa, who last week warned Argentina he would hold it in contempt of court should it continue to claim no wrongdoing, was criticized by Cabinet Chief Jorge Capitanich for his inaction. “His lack of decision clearly comes from not understanding the process, not understanding Argentina’s status as a sovereign country,” said Capitanich of the judge. His country has labeled holdout investors such as New York-based Elliott Management and Aurelius Capital Management as vultures, and a recent Facebook post from Argentina’s Economy Minister Axel Kicillof featured a drawing depicting the U.S. as a beady-eyed vulture.
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In another heated legal battle, Louis Bacon has brought his Bahamian court complaint to New York, alleging that an island neighbor with whom he has a dispute over land is out to slander his name. The Moore Capital Management founder is seeking to gain control of video recordings that, the lawsuit alleges, falsely characterize “him as an insider trader, drug trafficker, Ku Klux Klan member and murderer, ” Bloomberg reports. Bacon says Nygard International Partnership founder and women’s clothing manufacturer Peter Nygard is upset with him because Bacon took issue with Nygard’s home expansion. Bacon, a longtime environmentalist who was awarded the Audobon Medal for his advocacy work, charged that Nygard’s expansion was illegal and had an adverse effect on the environment, according to the report. Among the numerous, and astonishing, complaints listed in the suit, Bacon asserts that Nygard flew Louis Farrakhan into the Bahamas, where the Nation of Islam leader publicly rebuked him and accused him of racism, as part of a smear campaign “intended to disparage, intimidate, and ultimately drive Mr. Bacon away from the Bahamas,” said the complaint.

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