This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Millennium Hedge Fund Putting Up Legal Reserve

"They were the elite group, the top 10 or 20," the investor said. "They didn't publicize themselves, but everybody in the industry mentioned them on various occasions."

With a 30.66% return in 2000, a 15.6% return in the dismal days of 2001, a 9.62% return in 2002 and a 10.89% return last year, the offshore fund was a bright spot for investors who lost money in the equity markets.

As large institutional investors began to look more closely at hedge funds during those years, Millennium revamped its agreements with investors, toughening restrictions on withdrawals.

Because hedge funds can have volatile stretches, particularly in times when markets are shifting, provisions -- or gates -- that keep investors from redeeming all their shares on short notice are common, said Ron Geffner, head of the financial services practice at New York law firm Sadis & Goldberg.

"These gates often vary from fund to fund depending in part on the strategy, with an eye to the liquidity and volatility of the portfolio," he said. "They are designed to prevent a run on the bank, [by] investors who may panic and could cause unnecessary fluctuation in the returns the fund would generate. Gates are not such a bad thing -- they're not just designed to protect the manager."

However, that's just what Millennium's restrictions are doing: shutting up its largest and most recent investors' money for a minimum of three years in a conventional lock-up period.

Between the original terms of their investments with Millennium and the firm's now-locked gates, the hedge fund has been able to hang on to billions of dollars that investors would like back.

"You can't get out since the scandal broke," said one investor, who said Millennium has returned 10% of each of his redemption requests. "We got out what we could and we continue to get out what we can. It could have been half their assets -- if not more -- if they didn't have the gate. They're extremely lucky they've got the gates, or they'd probably be finished."
3 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $118.03 0.00%
FB $105.41 0.00%
GOOG $748.15 0.00%
TSLA $229.64 0.00%
YHOO $33.16 0.00%


Chart of I:DJI
DOW 17,813.39 +1.20 0.01%
S&P 500 2,088.87 -0.27 -0.01%
NASDAQ 5,116.1430 +13.3350 0.26%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs