Platinum Partners raided by federal agents amid dual investigations

NEW YORK (Reuters) - Agents from the Federal Bureau of Investigation and the U.S. Postal Inspection Service raided the New York headquarters of hedge fund firm Platinum Partners Wednesday morning, according to a person familiar with the situation.

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“We are in receipt of a search warrant from law enforcement and are fully cooperating. We look forward to resolving this on a timely basis,” Platinum said in a statement emailed by an external spokesman.

Kelly Langmesser, an FBI spokeswoman, confirmed a “law enforcement action” was undertaken at the hedge fund firm’s Manhattan office.

Both Platinum and the FBI declined further comment. The U.S. Postal Inspection Service did not immediately respond to a request for comment.

Platinum, led by Mark Nordlicht, previously received a subpoena from the U.S. Attorney’s Office for the Eastern District of New York, according to the person, who requested anonymity because the information is private. The exact nature of that subpoena and if it is related to the action Wednesday was unclear.

The person added that the raid is separate from a wide-ranging corruption investigation by the U.S. Attorney’s Office for the Southern District of New York.

That probe resulted in the arrest on June 8 of longtime Platinum associate Murray Huberfeld for allegedly orchestrating a bribe to a union leader in exchange for an investment in Platinum. Huberfeld, through his attorney, has disputed the charges. Platinum was not named as a defendant in the related case.

Platinum remains in business with more than $1 billion under management. But the firm recently informed investors that it was likely to slowly wind down its largest hedge fund offering, Platinum Partners Value Arbitrage, and is considering doing the same for its other large strategy, Platinum Partners Credit Opportunities.

“Going forward, the plan contemplated for PPVA will be for it to operate as a close ended fund, whereby the fund will be closed to new subscriptions, and proceeds of the monetization of any of our investments will be used to either support other current investments in the portfolio or distributed to stakeholders,” Nordlicht wrote in a note to investors on June 15 seen by Reuters.

He added that the unwinding would be done gradually to avoid a “fire sale” of investments.

Founded in 2003, Platinum has racked up profits that few in the hedge fund industry can match. But its strategy of lending to troubled companies carries risks that have turned off many large investors, according to a Reuters investigation earlier this year.

(For Reuters’ Special Report on Platinum, click here - here)

Reporting by Lawrence Delevingne, additional repporting by Nate Raymond; Editing by Andrew Hay