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Pile-Up of Wall Street Hedge Funds ’Keeping Open’ for Business by Denying Redemption Requests

Dec. 22, 2015 (EIRNS)—Yesterday’s Wall Street Journal presented a review of the latest updates on financial disintegration, by recounting the names of the hedge funds which have gone under, and also covering the status of several more prominent firms, which are nominally staying in business, only by imposing "deferred payment" to client speculators, who want to cash out.

Among the first category, LionEye Capital Management LLC will close next week, after a year ago, managing a $1.5 billion fund; others closing out include Fortress Investment Group and BlueCrest Capital Management.

In the category of management funds keeping up a pretense of solvency, there are many examples. The infamous Carlyle Group LP, has an affiliate in this position—the Claren Road Asset Management. Claren is expected to have as of Jan. 1 a sum of $1.25 billion under their management, way down from $8.5 billion they had just 15 months ago, before their client-investors began demanding mass-withdrawals over 2015. However, since the Claren Road operation has imposed a "delayed-repayment" policy for six months, the imputed year-end $1.25 billion does not even cover the outstanding demands deferred over the third and fourth quarters of 2015!

The same situation applies to many other Wall Street houses of speculation, whether big names or small fry. Mason Capital Management LLC, based in New York City, had $8.3 billion to manage in early 2015, and now claims to have $4.9 billion. Stone Lion Capital Partners LP recently suspended redemptions in its credit hedge fund, since so many investors were demanding their money back. A Los Angeles-based operation, called Red Mountain Capital Partners, started up by Goldman Sachs, has restructured itself in a way to take five years to pay out investors, who asked to cash out in 2015.

The bums are bankrupt! Some of the withdrawals and sell-off taking place, besides being a stampede for the exits, is due to attempt to meet contracts, and reserve requirements, but it marks that the system is gone.