Rough days for Bayou investors

摘要

On Sept. 1, the U.S. Attorney for the Southern District of New York filed a civil forfeiture action against all of the assets of Bayou Management LLC and all of its affiliated funds and broker dealer. The complaint alleges that Bayou from 1998 through 2005 overstated gains and understated losses. It also alleges Bayou created phony accounting firm Richmond Fairfield Associates, to mask the $440 hedge fund's discrepencies. "In hindsight I wish I was more careful but there was no reason to see this as anything other than what it purported to be," says one Bayou investor who wanted to get some short exposure to the market back in 2003. His $250 000 investment with Bayou grew to $336, 000 by July 2005 when he was informed the fund would close. Bayou investors received a letter, dated July 27, from Bayou CEO Samuel Israel III, explaining that for personal reasons the fund would be closed and investor money returned. "It was kind of a tear jerker," the investor says. But when the checks didn't arrive he made some phone calls and nobody at Bayou was there.