Things continue to go swimmingly over at Sentinel, the cash management firm which, to date: didn’t know the exact regulatory body to contact about halting redemption requests from investors (and incorrectly guessed the CFTC); was accused of selling assets too cheaply—at discounts of as much as 30 percent to market prices—and without asking permission first, to Ken Griffin at Citadel; filed for Chapter 11 bankruptcy; and had a complaint filed against it by the SEC claiming Sentinel defrauded its clients by improperly “commingling, misappropriating, and leveraging their securities without their knowledge,” in violation of the Investment Advisers Act. Regulators checking out the befuddled fund manager’s collapse said yesterday that, oh, $500 million was missing from its accounts, which could indicate Sentinel’s further screwing of clients.
Obviously this sort of public revelation is not a big deal for Sentintel, which has been called out for much worse in the past, and is probably disappointed it took regulators so long to find this one. Today the party line is no foul play; tomorrow, your guess is as good as ours, but we’re thinking something involving Bear Stearns's High-Grade Structured Credit Strategies Enhanced Fund team, a couple of Quaaludes, and confusion over the safety word gone horribly wrong.
Earlier: Sentinel Only Playing Dumb, Actually Run By Racketeering, Fed Manipulating Geniuses
Sentinel's $500m shortfall [Financial Times]