Administration March 11, 2003

Hedge Fund Manager Walks Away over Pricing Imbroglio

November 3, 2003 (PLANSPONSOR.com) - A New York hedge fund manager stepped down Friday after butting heads with colleagues about the valuing of certain investments.

Reported by

Fred Schneyer

Anthony Barkan, who oversaw The Clinton Group’s asset-backed securities team, said in a statement that he disagreed with others at the company about how certain bonds were priced, that he reported the disagreement to the fund’s officers and that the dispute “forced” him to resign, Reuters reported.

“The decision was particularly difficult for me especially given the excellent performance of the ABS group this year,” Barkan told Reuters, referring to his asset-backed securities group. “I had to stand by my principles.”

The $5-billion hedge fund said in a news release that it was “surprised” at Barkan’s departure, but that it would take the complaints seriously. The firm said it had hired accountants PricewaterhouseCoopers to review the issue.

Barkan’s departure was on the same day that authorities brought charges against another hedge fund manager for overstating investment returns. The US Attorney’s Office and the US Securities and Exchange Commission accused Edward Strafaci, a former manager at hedge fund Lipper & Co., of overvaluing investments. Edward Strafaci, who left Lipper in early 2002, faces four criminal charges, which together carry a maximum penalty of 30 years.

Clinton Group, which has $5.3 billion in hedge fund assets, is the world’s number 14 hedge fund, according to a poll by Institutional Investor magazine.