Plainfield, the once $5 billion AUM rich hedge fund that came this close to blowing up in 2008, is now being investigated by the FBI for fraud thanks to a new provision in the Dodd Frank bill – and an anonymous whistleblower and his or her lawyer, Stuart Meissner.
From Fortune’s Katie Benner:
The FBI is probing whether Plainfield committed fraud by overstating the value of some of its investments and charging management fees based on those inflated assets.
In a civil complaint filed with the Securities & Exchange Commission on August 6, Meissner’s [anonymous] client charges in his suit that Plainfield overvalued some investments so it could “defraud its own investors by unlawfully charging higher management fees than those which it is in fact entitled to.”
Plainfield is one of the hedge funds that lost so of money during the crash that it had to gate in its investors to prevent them from pulling their funds out.
By early 2010, only 20% of the fund’s assets consisted of money that investors actually wanted Plainfield to manage (and a chunk of that belonged to Plainfield employees).
Their assets are now down to something around $2.6 billion and they sold their old office, “the finest in Greenwich, CT,” to move to a cheaper office in Stamford, CT.
Even if Plainfield did commit fraud, at least they had a comment with some balls:
“This story is merely the latest iteration of a strategy of filing a baseless complaint with regulatory authorities against Plainfield, and then using the press to publicize the ‘news’ that the authorities are investigating the complaint. Our lawyers have advised us not to discuss this further at this time, but we want to be clear that the allegations against Plainfield are entirely without merit. We believe this reporter has shown a consistent bias against Plainfield in her reporting.”