Fortelus, a London-based distressed debt hedge fund firm founded by former Silver Point investment professional Tim Babich, was the victim of a telephone scam that drained its accounts of $1.2 million in a single afternoon, according to a Bloomberg report that cited court filings. The firm’s former chief financial officer, Thomas Meston, answered a call on a Friday afternoon from someone claiming to be from Coutts, the hedge fund firm’s bank. The caller told Meston there may have been fraudulent activity on the firm’s accounts and persuaded Meston to use the firm’s smart card security system to generate codes to cancel 15 alleged suspicious payments. When Meston checked the firm’s accounts the following Monday, he discovered that the funds had gone missing.
The fraud occurred in December 2013. Fortelus terminated Meston and is now suing him for breaching his duty to protect the firm’s assets, according to the report. Meston’s lawyers denied that their client was negligent, saying that Meston “believed that he was preventing a fraud from being carried out against the claimants, and this belief was reasonable,” according to court filings.
Fortelus’s lawyer Daniel Astaire told Bloomberg that client funds were not affected by the scam, which the firm reported to police. The lawyer said in an e-mail that Fortelus has “strong internal policies against fraud prevention” and that the breach was “an isolated incident,” according to the report.
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New York-based Highbridge Capital Management has hired two portfolio managers to start a collateralized debt business specializing in European corporate loans and bonds, according to the Wall Street Journal. Nick Strong and Simon Peatfield are joining the firm’s Principal Strategies Unit. They previously worked at asset manager Intermediate Capital Group. Highbridge is owned by J.P. Morgan Chase.
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A managing director for Chicago-based hedge fund firm Balyasny Asset Management says Greece faces imminent civil unrest if the country cannot strike a deal with its creditors, according to a Bloomberg report. In Sunday’s referendum, brought by Greek Prime Minister Alexis Tsipras, Greek voters soundly rejected further austerity measures that the country’s creditors required for further bailout funds, pushing Greece further toward an exit from the eurozone.
“I don’t see a good resolution any time soon,” Colin Lancaster, senior managing director with Balyasny, told Bloomberg via e-mail. “The big question is whether the EU adopts a strategy of waiting them out. The hope would be that the unrest leads to a unity government or change in government.” Balyasny no longer has any exposure to Greece as of three weeks ago, according to the report. Hedge funds cut their exposure to stocks ahead of Sunday’s vote, according to the report.