Wall Street Manna

An irreverent look at Wall Street

Wednesday, June 18, 2008

Lehman sells $5B of assets to hedge fund it invested in!

WTF? The story on Bloomberg:

Lehman's Rieder Took $5 Billion of Assets With Him to New Fund

By Yalman Onaran

June 18 (Bloomberg) -- Lehman Brothers Holdings Inc. invested in former trader Rick Rieder's new hedge fund and sold it about $5 billion of assets, positioning the investment bank to profit from the stakes while shrinking its own balance sheet.

Lehman, the fourth-biggest U.S. securities firm, is a minority investor in the fund, R3 Capital Partners, said Rieder who declined to say how much capital he has raised from his former employer or outside investors. Lehman spokeswoman Kerrie Cohen declined to comment.

``These are assets we feel very comfortable with,'' Rieder, 46, said in an interview today. ``They have terrific potential for great returns. Just like other shareholders, Lehman will benefit from the returns we'll make going forward.''

Rieder, a 21-year Lehman veteran, most recently ran Global Principal Strategies, investing in credit arbitrage, aviation finance and private equity, and left the firm last month to start R3. Lehman sold $147 billion of assets in the three months ending May as it hunkered down to weather the credit crisis.

Rieder said 75 percent of the assets his fund bought were corporate bonds and loans. There are also some distressed debt and aviation assets in the mix, two other areas he focused on while at Lehman. While it was easier to start with the assets he had managed as a trader at Lehman, he plans to expand along the same asset classes, Rieder said.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a0gOSkI9SNE0&refer=home

Here was the story and the rumors.
http://aaronandmoses.blogspot.com/2008/06/lehmans-latest.html

It looks like it was true! Are you kidding me? This is a just a way for Lehman to have an off-balance sheet SIV.

What a crock of manure!

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