Yet Again

27 February 2006



Warrant Issued for Arrest of Hedge Fund Manager

The call for the regulation of hedge funds is going to get another boost shortly. A bench warrant has been issued for the arrest of Kirk Wright, founder and CEO of Atlanta-based International Management Associates. It seems that of the $15 million invested with IMA by NFL and former NFL players, regulators can only find about $150,000.

Mr. Wright has some explaining to do at very least. The Wall Street Journal says that over the week-end, the SEC and a receiver appointed to deal with IMA’s situation have gone over the books, and they can’t find most of the money anywhere. They hope Mr. Wright can help them find it.

It would be nice to think that it is merely a matter of uncovering a lost account number, but it seems to be worse than that. The WSJ interviewed Mr. Wright back on the 15th of February, and at that time, he said that he knew of “no irregularities.” In the same interview, he acknowledged that there hadn’t been an audit of his fund since 2003. That should get alarm bells ringing.

That isn’t to say that anything illegal has occurred, nor does it mean there is no money at all in the fund. Indeed, a judge in Georgia has frozen $150 million in assets. The same judge, however, also revoked the passports of the fund’s principals, according to the WSJ. Meanwhile, clients like Terrell Davis, Steve Atwater, Rod Smith, Ray Crockett, Blaine Bishop and Al Smith, (current or former members of the Denver Broncos), and Clyde Simmons (formerly of the Chicago Bears) don’t seem to be able to withdraw their money.

Just quite how a fund manager can go two or three years without an audit is mind-numbing, and it raises all sorts of tax issues. A plain vanilla mutual fund could never get away with this, and the IMA episode is only going to put pressure on the SEC to make sure hedge funds can’t either. And as more and more rich investors get bilked, the political pressure may become overwhelming. At least, one hopes so.

The Danish flag appears here as a protest against the violence being done to the free press of that country and elsewhere by those offended by some cartoons of the Prophet Muhammed, peace be unto him. A perceived insult is not an excuse for intimidation and violence, even in the name of the Creator. One cannot insult God, only small-minded men who falsely claim to speak for Him.

© Copyright 2006 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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