20/06/2012
Author: Britt Erica Tunick
Plainfield exonerated following SEC investigation
M ore than two years after disgruntled borrowers launched a smear campaign against Plainfield Asset M anagement and a
whistleblower complaint was anonymously filed with the Securities and Exchange Commission (SEC), the firm has been
vindicated.
In a June 6 letter to Plainfield’s attorney the SEC said it had completed its investigation of the firm and that it did not
intend to recommend any enforcement action, HFM Week has learned.
“The anonymous allegations were all bogus,” said Plainfield’s founder, M ax Holmes, who has not ruled out the possibility of
launching another hedge fund in the future, but says he is currently focusing his efforts on wrapping up Plainfield’s final
holdings in the most profitable way for the firm’s remaining investors.
The SEC’s exoneration is bittersweet for Plainfield, which is in the final stages of winding down its operations. Plainfield
Special Situations M aster Fund, which had roughly 300 separate assets when it began liquidating its holdings in June 2009, is
now down to only two assets – which Holmes said he is only holding on to because they are “investments with considerable
upside.” Investors have been paid out quarterly, ultimately receiving about $0.60 on the dollar from their investments.
Like many of its peers, the firm was hit hard by the 2008 credit crisis. Having ventured a bit too far from its core distressed
investment strategy, the firm moved into the direct lending business, lured by the high returns of lending to distressed
borrowers. But high defaults among the firm’s middle-market loans, coupled with an inflow of redemption requests from
investors desperate for cash, hit hard. Plainfield, which had $5 billion in assets under management in the fall of 2008, was
hit with $1.6 billion in redemption requests at the end of 2008.
The exodus continued in 2009 when Plainfield’s flagship fund failed to rebound and the firm was hit with public accusations
of inflating its portfolio value to generate higher management fees.
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