Fortune: Englander May Settle With Spitzer

Fortune reported that hedge fund legend Izzy Englander may cough up $100 million to settle securities fraud charged with Eliot Spitzer. According to the government, Englander’s Millennium used a series of unusual trading tactics.

People close to the case say Millennium devoted some $1 billion to its trading strategy, opening up thousands of mutual fund accounts to disguise what the firm was doing. Allegedly the firm even deployed a byzantine trading tactic that involved creating subsidiaries with peculiar names such as Osaykanu LLC (Oh-Say-Can-You LLC, apparently) to hide its trading.

Englander has amassed an enviable record on Wall Street. He reportedly manages money for established clientele like Duke Univeristy. But the Millennium fund isn’t your typical money management operation.

Millennium, with around $5 billion in assets, is an “odd duck compared to other hedge funds we’ve looked at,: says a private detective who specializes in hedge fund reconnaissance.

There are private detectives who specialize in hedge fund recon! What would Sam Spade think?

For one thing, it consists of a labyrinth of entities with different names. Millennium, which has upwards of 100 traders, has tended to be more of a sophisticated day-trading shop, say experts. “Englander takes traders off the street, gives them a pile of money, and says, ‘Here’s a chair and computer — go trade’,” says someone familiar with the firm.
Many former employees of Millennium counter that Englander is very serious about running his business. Says Peter Feinberg, a former Millennium trader who now heads institutional equity trading at Oppenheimer & Co.: “Izzy’s an absolute straight shooter.”
That’s certainly the way Englander would like his investors to think of him: an upmarket guy who deploys an overwhelming array of ultra-sophisticated models that would just baffle mere civilians. But to maintain an edge, Millennium adapted an “almost anything-goes” mode, according to some former traders.

Posted by on November 4th, 2005 at 11:28 am


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