As we reported earlier, David Ganek's Level Global, one of three firms to be raided by the FBI last November as part of their insider trading investigation, is shutting down (prior to that, we shared that the firm had received $750 million in redemption requests and that potential liquidation had been discussed with investors). This is of course a sad turn of event for all the hardworking employees at the firm and we wish them only the best in the future. On that note, I thought I'd cheer everyone up, or at least attempt to distract them, with a little story about a conversation I had with representatives of the firm several days ago.
To be clear, this story isn't about back-patting ourselves for strongly suspecting (on account of being explicitly told) three weeks ago that Level Global was going to be shutting down but rather one we think adds a little more color to the firm's thinking and spotlights one of it's delightful characters. Please note: I never have and never will post conversations I have with people unless they're of topical interest, like the below, and, more importantly, the person doesn't care to tell me it's off the record until after he berates me and lies through his teeth.
Having spoken with Level Global investors and other sources quite close to the situation, I called up the fund to let them know I was working on an item that would center around them contemplating shutting down. I had previously spoken with Level on two prior occasions but this was the first time I had verbatim quotes from their mouths to investors' ears re: a potential 3/31 liquidation.
My call was with several Level executives, including their General Counsel and COO, who did most of the talking. Things started out friendly enough- I told him that I knew about the $750 million in redemptions so far and that the phrase "all options are on the table" had been used repeatedly. Here's a transcript of our chat.
COO: No decision has been made at all. There's no story here. All options *are* always on the table for every hedge fund.
BL: Hmm, I'm not necessarily sure that's true.
COO: Yes, it is. At any given time any hedge fund is reviewing all their options.
BL: So if I called up any random hedge fund, who was not raided by the FBI had not received a three quarters of a billion in redemptions and asked "how's business?" you're saying they would tell me "Well we're either going to keep going or shut the place down; all options are on the table?"
BL: Well, okay, agree to disagree. Anyway, if I do the story, just to check, do you want me to quote you as the COO or a spokesperson? Or would you like to say you declined to comment?
COO: [Pause] Wait, what? You're doing a story?
BL: Yes, that's what I said earlier.
COO: [Tone gets quite a bit more hostile at this point] Maybe I wasn't being direct enough with you before-- DO NOT DO A STORY. It is purely based on speculation- WRONG speculation- and it is NOT TRUE. You're going to embarrass yourself if you print this.
BL: Well I'm sorry but I have been speaking with your investors and other people who know the firm, and they're telling me otherwise.
COO: [Voice you might use when speaking to a naughty child or bad dog] Our investors, I don't know what they're getting that from or why they're telling you that- IT'S NOT TRUE and you CAN-NOT write that. YOU WILL LOOK STUPID IF YOU WRITE THIS.
BL: You yourself have told me "all options are on the table"-- meaning one of the options is closing. So how is it not true that you're contemplating closing? I'm using your own words. And it's not clear that a hedge fund would pose a "liquidation" scenario on a call with investors unless it wasn't a possibility.
COO: Now you listen to me- I tried to talk to you like a human being. You have no integrity.
BL: Actually I think I have a lot of integrity, which is why I called you to try and get the entire story, rather than just running it.
COO: [Screaming at this point] If you run this story you will have no integrity. You are putting 65 people's livelihoods at risk. SIXTY-FIVE PEOPLE. You know what? I want to speak to your boss.
BL: You're speaking to her.
COO: What do you mean, you have no boss?
BL: I have a boss, but he's on the business side- editorial is at my discretion.
COO: Well you tell that boss that if you run this I'm going to take legal action and you need to be dealt with.
BL: Alright I'll tell him that but just so you know, I don't actually appreciate being spoken to like a 5 year-old.
COO: I don't care- you're acting like a five year-old. A five year-old who needs a time out.
BL: I'll pass that on to my parents. Is there anything else you'd like to tell me?
COO: No, there's not.
BL: Okay, have a nice rest of your day.