rumour: LTCM Founder Myron Scholes Retired From His Hedge Fund

myronscholes tbi

Apparently Myron Scholes, the famed hedge fund manager whose huge hedge fund, Long Term Capital Management (LTCM), epically crashed in 1998, has retired from Platinum Grove Asset Management.

Most people are probably thinking, finally!

But for investors, it would mean a big shake up at the firm.

According to Hedge Fund Alert, he there’s talk that he retired. Here’s what the publication says:

There’s talk that Nobel laureate and hedge fund veteran Myron Scholes retired as chairman of Platinum GroveAsset Management around the end of last year. A spokesperson for the Purchase,N.Y., firm declined to comment. Butin a recent SEC filing, Platinum Grove identified Chi-Fu Huang as chairman.

So the rumour of his retirement has some foundation in a recent SEC filing, pictured below. Platinum Grove names Chi-Fu Huang the firm’s managing partner.

Here’s the November 2011 filing Hedge Fund Alert seems to be talking about:

Myron Scholes’ name appears no where on the filing, which states all of the general information about the firm – despite there being no public word of his retirement.

The fund declined to comment to HF Alert, so take the rumour for what you will.

As for why he might have retired – there’s only this obvious fact: Platinum Grove (~$5 billion as of 2008) suffered big losses in 2008 (like many others).

And there’s his reputation. Nassim Taleb said publicly what most people have probably been thinking since Scholes co-founded Platinum Grove in 1999, just one year after LTCM crashed: Rather than giving advice on managing risk (more than slightly ironic for someone whose fund collapsed because it had none, but the guy did co-structure Black-Scholes), Scholes should have retired years ago (to play sudoku, in Taleb’s words).

Scholes of course didn’t give a crap* what people thought and continued overseeing Platinum Grove, at least until recently.

When asked what he thought about Taleb’s recommendation, Scholes said:

If someone says to you, “Go to an old-folks’ home,” that’s kind of ridiculous, because a lot of old people are doing terrific things for society. I never tried sudoku. Maybe he spends his time doing sudoku.

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