Alexandra Fund Probed by Regulators
Alexandra Fund Says It's Being Probed by Regulators (Update2)
Oct. 25 (Bloomberg) -- The Securities and Exchange Commission and the U.S. attorney's office are broadening a probe of the market for private share sales of publicly traded equities by investigating Alexandra Investment Management LLC, a $1.6 billion hedge-fund company.
Alexandra said in a 2004 audited financial statement, sent to investors in June, that it has provided information on its PIPEs business to federal regulators since last year. The New York-based firm said the inquiry may be connected to investigations of ``numerous participants'' in the PIPEs market.
Federal regulators began questioning investors last year to ascertain whether they used inside information to profit from declines in stocks before a PIPEs sale was made public. The SEC filed a civil suit against a former managing director at SG Cowen Securities Corp. in April, accusing him of fraud and insider trading. The suit was the agency's first attempt to punish alleged abuses in the PIPEs market.
Alexandra said that ``neither the U.S. attorney's office nor the SEC has advised the investment adviser about the particular scope of the investigation or identified particular investment transactions that are under investigation.''
Howard Goldstein, a partner at Fried, Frank, Harris, Shriver & Jacobson LLP who's representing Alexandra, declined to comment, as did SEC spokesman John Heine and Robert Nardoza, a spokesman for the U.S. attorney in New York.
Volman Case
The U.S. attorney for the Eastern District of New York indicted an Alexandra employee, Slava Volman, in April 2004 for alleged securities violations between 1999 and 2002, when he was an employee of Donald & Co. Securities Inc., a broker-dealer in Garden City, New York. Alexandra's financial statement didn't say whether the PIPEs probe is connected to the Volman case.
Charles Ross, a partner at Herrick, Feinstein LLP in New York, who is representing Volman, declined to comment.
Volman joined Alexandra in November 2003 and directed private-placement investments until he was indicted. The company said it had about $82 million of PIPEs investments at the end of the year. Companies issued about $3.9 billion worth of PIPEs in the third quarter, according to San Diego, California-based Sagient Research.
Asset Growth
Alexandra was founded in 1993 by Mikhail Filimonov and Dimitri Sogoloff, according to marketing documents. The Alexandra Global Fund returned 1.9 percent this year through September, according to data compiled by Bloomberg. Its return has averaged 15.4 percent a year since 1995.
Filimonov, who named the hedge fund after his daughter, and Sogoloff were previously co-managers of the convertible-bond department for LIT America Inc. They worked at Baring Securities Inc. earlier in their careers.
Alexandra's assets climbed to $1.6 billion at the end of last year from $170 million at the end of 2002. The firm started as a specialist in global convertible-bond arbitrage. It has added other strategies including distressed debt and long-short equity. Its convertible portfolio represented about 40 percent of assets at the end of last year, according to the financial statement.
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