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To: Eashoa' M'sheekha who wrote (17324)	9/3/1998 10:36:00 AM
From: Alex	Respond to of 116770

GLOBAL MARKETS CLAIM $1.8B VICTIM By BETH PISKORA ------------------------------------------------------------------------ The red storm has taken down a few more victims. Long-Term Capital Management, a hedge fund run by former Salomon Brothers Vice Chairman John Meriwether, lost $1.8 billion in August, bringing its total asset base down to $2.3 billion. Meriwether, who lost his job at Salomon in the wake of a 1991 bond-trading scandal, is now frantically attempting damage control. In a letter to fund investors, a copy of which was obtained by The Post, Meriwether characterized the 44 percent loss as severe, painful and a shock. The fund, which counts Nobel laureates Myron Scholes and Robert Merton as partners, has never before posted such a big loss. While at Salomon, Meriwether, who was immortalized in the best-selling book, Liar's Poker, made million-dollar bets against his colleagues, sometimes over such arcane things as the numbers on a dollar bill. Yesterday, Meriwether reported the account of bets gone bad. He said Russian holdings accounted for less than 10 percent of the losses for Long-Term Capital, while the ongoing turmoil in the global markets was responsible for the rest. The Greenwich, Conn.-based hedge fund is but one more victim in a lengthening list of losers from the global economic turmoil. Last week, the manager of George Soros' Quantum fund, the world's biggest hedge fund with $22 billion in assets, admitted he lost $2 billion in Russian holdings so far this year. Nary a day passes without a big bank or brokerage confessing that they, too, have big losses. Just yesterday, Chase Manhattan Corp., the nation's biggest bank, and Donaldson, Lufkin & Jenrette, the biggest underwriter of high-yield bonds, confirmed suspicions about their losses. For Long-Term Capital Management, the losses occurred in a wide variety of investment strategies involving G-7 government fixed-income markets, equity-related instruments and emerging-market debt. Despite the losses - the fund is down 52 percent for the year - Meriwether asked the partners to add to their investment, saying it is prudent to raise additional capital. A spokesperson said it was too early to say whether any of the partners would take Meriwether up on his offer. In fact, some may choose to pull money out of the fund instead. A source close to Laurence Tisch told The Post that the co-CEO of Loews Corp., is a partner in the hedge fund, but is planning to pull his large investment out at the first possible opportunity. Tisch's spokesperson did not return a Post reporter's phone calls. In his letter, Meriwether asserts that the partnership contract allows withdrawals only at year-end, and then only in stages, with a maximum of 12 percent of any one partner's investment withdrawn at any one time. But an attorney who has prepared hedge fund contracts said most of them have an escape clause for partners, allowing them to make withdrawals if the fund suffers a big loss in its asset base. A spokesman for Long-Term Capital would not confirm or deny whether such a clause exists in that company's partnership contracts. Other financial service firms joined the lengthening list of losers in the global economic contagion. Chase Manhattan Corp. said it expects to take third-quarter charges of $200 million to cover losses from Russian holdings. Donaldson, Lufkin & Jenrette Inc. said it lost an unspecified amount of money as financial turmoil in Russia helped spark losses in trading revenue. And Moody's Investors Service said it placed Bankers Trust debt on ratings watch in light of the bank's admission that it will have a net loss in the third quarter after losing $350 million on Russian securities. nypostonline.com