Deephaven Capital Management, LLC was a

subsidiary A subsidiary, subsidiary company, or daughter company is a company (law), company completely or partially owned or controlled by another company, called the parent company or holding company, which has legal and financial control over the subsidia ...

Knight Capital Group The Knight Capital Group was an American global financial services firm engaging in market making, electronic execution, and institutional sales and trading. With its high-frequency trading algorithms Knight was the largest trader in U.S. equitie ...

that managed various

hedge fund A hedge fund is a Pooling (resource management), pooled investment fund that holds Market liquidity, liquid assets and that makes use of complex trader (finance), trading and risk management techniques to aim to improve investment performance and ...

s. The company was later shutdown due to poor performance blamed on prevailing macro-economic environment.

History

Deephaven Capital Management was established in 1994 with $5 million in assets by Irvin Kessler. It focused on event-driven funds in addition to five additional funds managed from its offices in

Minnetonka Minnetonka ( ) is a city in Hennepin County, Minnesota, United States. A western suburb of the Twin Cities, Minnetonka is located about west of Minneapolis. At the 2020 census, the city's population was 53,781. Minnetonka is the home of Car ...

London London is the Capital city, capital and List of urban areas in the United Kingdom, largest city of both England and the United Kingdom, with a population of in . London metropolitan area, Its wider metropolitan area is the largest in Wester ...

, and Hong Kong. At its peak, the company managed $4 billion in assets in six different hedge funds. Kessler sold the company in 2000 to

although he continued to work there for a few more years before leaving to found Provident Advisors and later

Walleye Capital Walleye Capital (Walleye) is an American multi-strategy hedge fund management firm headquartered in New York with additional offices outside the US in London and Dubai. Background In 2005, Walleye was originally set up as an options marke ...

. The SEC investigated Deephaven Capital in 2006, accusing one of its portfolio managers of insider trading involving 19 of its

Private investment in public equity A private investment in public equity, often called a PIPE deal, involves the selling of publicly traded common shares or some form of preferred stock or convertible security to private investors. It is an allocation of shares in a public compan ...

(PIPE) offerings. The hedge fund agreed to pay the sum of $5.8 million in disgorgement, penalties and interests including $2.7 million paid for unlawful profit and $343,000 pre-judgment interest. The portfolio manager also paid $110,000 as part of the civil penalty. In late 2008, Deephaven froze its Global Multi-Strategy Fund with assets of $1.6 billion. The fund lost 32% in 2008, which resulted in investors requesting to withdraw 30% of their funds. Until then, the fund had yearly returns of 16%. In its 2008 filings, Deephaven reported a $5.7 million pretax quarterly loss, leading to a drastic slide of its $4 billion asset at the beginning of the year to $2.7 billion by October. In 2009, Deephaven sold its assets in the Global Multi-Strategy Fund to Stark Investments for up to $44.5 million after an initial payment of $7.3 million. Upon the sale, Deephaven's remaining assets were sold off; the office furniture was sold for cents on the dollar to a local asset manager,

Disciplined Growth Investors Disciplined Growth Investors, Inc. (DGI) is a SEC-registered independent asset management firm founded in February 1997 by Fred Martin in Minneapolis, Minnesota. Its headquarters are located on the 25th floor of the Fifth Street Towers in downt ...

.Star Tribune, October 23, 2009

References

External links

*{{dead-link, date=October 2023 Financial services companies of the United States Companies established in 1994 Companies disestablished in 2009