Meet the new Fabrice Tourre.
The notice alerts Llodra that he might be sued for his role in selling Magnetar-selected assets to investors.
In November, the news was that the SEC was investigating JPMorgan for its involvement in selling Magnetar assets. It seems the investigation led them to Llodra (much like the Goldman investigation led the SEC to Fabrice Tourre).
Lodra was most recently a structured products analyst at Harvard Management, where he invested the university’s endowment’s money in distressed ABS, CDOs, collateralized loan obligations and other securitized asset classes. UPDATE: He never executed a trade for Harvard.
More on Llodra:
- In June 2009, after the endowment lost billions, he quit Harvard Management because it decided to take a more “conservative” approach
- After Harvard Management, he joined Sunrise Securities Corp.
- He left Sunrise in November
Whlie at JPMorgan, Llodra sold Magnetar assets in a CDO called “Squared” to investors. The issue is that JPMorgan also helped Magnetar select the risky assets that went into Squared so that they could trade against them. So now investigators are looking into whether or not Llodra knew that Magnetar had selected the assets, knew that Magnetar planned buy insurance on Squared’s default, and sold “Squared” assets to investors anyway. (Presumably the SEC is also looking into whether or not Llodra had an obligation to tell investors.)
Magnetar is saying pretty much the same thing John Paulson and Goldman said about ABACUS. It’s saying, the CDO manager picked the assets, not us, according to ProPublica.
Magnetar said that the fund “did not at any time require or expect any specific assets to be purchased into the Squared transaction.” The fund said GSC, the CDO manager, “at all times exercised its own discretion and judgment regarding the characteristics and appropriateness of each of the assets selected for inclusion in Squared.”
But there might be one key difference that could separate the SEC’s investigation of JPMorgan from that of Goldman. JPMorgan lost money on it.
JPMorgan Chase, which kept the large, supposedly safe top slices of Squared on its books, without hedging itself, lost about $880 million on the deal.
(Magnetar earned $290 million, apparently.)