New York – Firm Linked To NYC Scandale To Shut Main Hedge Fund Following Arrest Of Associate

New York – Platinum Partners, the hedge fund firm linked to a New York City corruption scandal, is returning a majority of its assets to clients, according to a person familiar with the situation.

New York-based Platinum told investors on a conference call on Tuesday that recent negative media attention and requests for the return of capital had forced it begin the liquidation of its main Platinum Partners Value Arbitrage Fund, the person said, who requested anonymity because the information is private.

The firm is also considering shutting its Platinum Partners Credit Opportunities Fund which controls the balance of Platinum’s more than $1 billion in overall assets.

The development comes after the arrest last week of longtime Platinum associate Murray Huberfeld, who was accused of bribing Correction Officers’ Benevolent Association President Norman Seabrook in return for an investment in Platinum.

Platinum head Mark Nordlicht said on the conference call that the charges against Huberfeld were unfounded, the person said.

Huberfeld, through an attorney, declined to comment on the charges against him and the Platinum news.

An external spokesman for Platinum did not respond to a request for comment. News of the liquidation was first reported by the Wall Street Journal.

Founded in 2003, Platinum has racked up profits that are the envy of the hedge fund industry. But its winning strategy of lending to troubled companies carries risks that many institutional investors would just as soon not take.

For more information on the investigation, click on http://www.reuters.com/investigates/special-report/usa-hedgefunds-platinum