Malachite Capital Partners LP being investigated for possible fraud or breach of fiduciary to investors
Sonn Law Group is representing investors who have suffered losses investing in Malachite Capital Partners LP. If you or a family member has suffered losses investing, we want to discuss your case. Please contact us today for a free review of your case.
Malachite Capital Partners LP (“Malachite”) is being investigated based on allegations of possible fraud or breach of fiduciary to investors. Malachite Capital was channeled endowment and foundation money through Fund Evaluation Group. Fund Evaluation Group advises or directly runs portfolios for many charities, universities and other institutions.
Malachite Capital Management is a New York-based firm that oversees approximately $600 million. The firm recently announced its plans to dissolve its funds due to extreme adverse market conditions.
The firm, which was founded by former Goldman Sachs traders Jacob Weinig and Joe Aiken, told Bloomberg, “[d]ue to the extreme adverse market conditions of recent weeks and the resultant funds’ performance, the current and projected assets will not justify or support the current structure of the funds. It is in the best interest of the funds and their investors to dissolve the funds immediately pursuant to their governing documents in order to commence an orderly wind-down.”
FEG’s consultants allegedly recommended Malachite to institutions, including Utah’s public educational trust, as a “diversifying strategy” as recently as October 2019. The University of Toledo Foundation had $3.6 million with the hedge fund as of late last year and the University of Illinois system dropped an AQR fund to invest over $20 million in Malachite. Both institutions were still clients of FEG as of late 2019.
Malachite represented 5.6% of a pool of hedge fund investments that FEG built for clients — called a fund-of-funds — as of year-end 2019, regulatory filings show. Called the “FEG Absolute Access Fund,” this is one of several such vehicles that the firm channels money into from institutions whose portfolios the firm controls.
Hedge funds are well known for underperforming, shutting down, or being a bust. Because of recent volatility in the stock market, industry experts indicated that fatalities of hedge funds are “inevitable.”
In a brochure dated March 2019, Malachite stated that it “seeks to capture short-term volatility risk premium within the global equity markets while diligently monitoring risk and adhering to a strict risk management process.” However, when stocks dropped significantly and market volatility was at its peak, Malachite did not protect its investors. At this point is unclear whether any investor funds remain.
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