West Palm Beach (HedgeCo.Net) – After more than $2 billion in investor withdrawls, D.B. Zwirn & Co. was forced to liquidate it’s two largest hedge funds.
The firms onshore and offshore Special Opportunites Fund, which holds about $4.2 billion in assets, invested mainly in corporate and real estate debt by making long term private equity investments.
The fund came under scrutiny in 2006 for improper accounting practices, and the resulting delay of the financial audit was believed to fuel the surge of investor redemptions.
Independent auditors took almost 12 months before they could assure investors that the firm’s financial statements were in line with generally accepted auditing standards. By that time, the hedge fund manager had already admitted that an internal investigation found evidence of improper accounting methods and financial transfers.
After the hit by investors and the inevitable bad press that followed, founder Daniel Zwirn was forced to shut down both the funds, and hopes to have an update by March as to when the rest of the money will be distributed.
However, in a recent letter obtained by Bloomberg News, the money is said to be held in “a highly diverse portfolio of illiquid investments in multiple countries,” and could take up to four years to liquidate.
Despite the demise of the Special Opportunities Fund, D.B. Zwirn & Co. plans to continue its managing of alternative assets. Their portfolio will now manage about $1 billion.
Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net
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