$5 billion hedge fund DB Zwirn is under fire from its investors over loose financial controls at the firm according to the New York Post. Apparently it’s held a series of conference calls where Zwirn "discussed how a former finance executive with the fund inappropriately expensed ‘items’ " to its investors over a number of years. Zwirn woudln’t say what the inappropriately expensed "items" were.
Another source familiar with the calls said there was a lot of discussion of "whether these internal accounting problems extended further to issues that directly affected client capital," such as valuation of its holdings and allocation of its investors’ money…
One source close to Zwirn told The Post that while there were calls made over the weekend about its accounting issues, the problems did not affect the fund’s asset valuations.
Since Zwirn woudln’t divulge the "items", we can only have fun guessing at what the expenses were, and how they might have been disguised. Maybe due diligence visits to Scores? Stress/massage therapy provided by hookers? Personal trips disguised as business?
The firm’s name has been in the press fairly recently. It was one of the firms that hired former Citibank commodities hotshot David Becker after he was fired from that firm for cooking the books to influence his bonus. Becker recently pleaded guilty to fraud. Zwirn had no clue that he was embroiled in legal problems when they hired him. Great due diligence they did.
Hedge Loot Riddle – New York Post
So who is Daniel Zwirn? This is how he’s described by GAIM USA, where he’s listed as a speaker at their January 2007 conference:
Daniel Zwirn
Managing Partner & Founder – D.B. Zwirn & Co., L.P.
Daniel Zwirn, Managing Partner/Founder of D.B. Zwirn & Co., founded the business of DBZ & Co. in October 2001. He is Managing Member of Zwirn Holdings, a Senior Advisor of Highbridge Capital Management and JCK Partners, and also serves on the Strategic Advisory Board of Corbin Capital Partners. In addition, through December 2003, he served as Managing Director and Senior Portfolio Manager of the Special Opportunities Group of Highbridge Capital Management.
Prior to that, Mr. Zwirn served as Founder/Portfolio Manager of the Special Opportunities Group of MSD Capital, L.P., the private investment firm of Michael Dell. From 1997 through early 2000, Mr. Zwirn was employed at Davidson Kempner Partners, where he initiated the firm?s focus on direct debt investments as well as international merger arbitrage, for which he was given a mandate to open the firm?s London office. Prior to attending business school, Mr. Zwirn served as an analyst in media and communications mergers and private equity investments at Lazard Frères & Co. and Madison Dearborn Partners, respectively.
Mr. Zwirn received an M.B.A. from the Harvard Business School in 1998, a B.S. in Economics with a triple concentration in Accounting, Finance and Corporate Control (self-designed), cum laude, from the University of Pennsylvania?s Wharton School of Business in 1993, and a B.A.S. in Computer Science, cum laude, from the University of Pennsylvania?s Moore School of Electrical Engineering in 1993. He is a member of The Council on Foreign Relations (Term) and The Young Presidents Organization. He also serves on the Board of the Democratic Roundtable, the Advisory Council of The Hamilton Project at the Brookings Institution, the Leadership Council of the Robin Hood Foundation and the Board of Trustees of New York?s Public Theater.
Tags: Hedge funds
Not coming clean is a bad idea. You’re right, everyone’s gonna be left to speculate about those Scores due diligence trips!
Dealbreaker put up story a little while ago on Zwirn; they even used the stripper angle you joked about.
““inappropriately expensed ‘items’”—although the fund declined to say what the items—cough, strippers*, cough—in question were.”
Perhaps they bought sex toys they tried to pass off as office equipment
Or maybe the thousands of dollars of receipts for coffee sweetener were actually for a white powdery substance of another kind