Hedge Fund Founder Draws US Charges in Bid for Neiman Marcus | News & Analysis

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NEW YORK, United States — Dan Kamensky’s prison disaster deepened Thursday as US prosecutors stated the Marble Ridge Capital founder coerced Jefferies Financial Group Inc. into leaving behind an be offering for stocks in bankrupt store Neiman Marcus Group Inc. so his hedge fund may download them at a cheaper price.

Kamensky, 47, was once arrested and charged with crimes together with securities fraud, extortion and obstruction of justice for pressuring an unnamed funding financial institution to drop its bid, the US Attorney’s Office for the Southern District of New York stated in a observation. Kamensky was once sued over the similar allegations via the Securities and Exchange Commission, which recognized the financial institution as Jefferies.

Kamensky, after finding out July 31 that Jefferies submitted the next bid than Marble Ridge for Neiman stocks, contacted the funding financial institution and threatened to make use of his place at the luxurious store’s collectors committee to dam the be offering if it wasn’t withdrawn, the SEC stated. He added that if Jefferies went forward with its bid, Marble Ridge would stop doing industry with the company.

The allegations be offering an extraordinary glimpse into the bare-knuckled techniques on occasion deployed in distressed-debt making an investment. Even extra odd is the chance of a fund supervisor going through legal fees for movements they take in serving on particular panels which are supposed to give protection to collectors in chapter circumstances.

Kamensky declines to remark, a consultant for him stated in a observation.

Kamensky’s Pleas

After Kamensky harassed Jefferies, it did pull its bid. But the financial institution additionally reported his habits to the collectors committee, prompting Kamensky to succeed in out to Jefferies to induce it to help him in covering-up what he had finished. Kamensky admitted to Jefferies that he was once liable to going to prison. Jefferies declined to lend a hand him, consistent with the SEC, which is looking for sanctions together with civil financial consequences

Creditor representatives like Kamensky who serve on professional, court-supervised committees have a fiduciary accountability to appear out for the pursuits of the panel. Kamensky instructed the U.S. Trustee’s place of work — the Justice Department’s chapter watchdog — that he understood he was once required to behave “in the most productive passion of unsecured collectors normally and put the ones pursuits above your individual private pursuits,” consistent with the legal criticism.

Kamensky’s fall was once brought about via Joe Femenia, an ex-Navy SEAL who’s now Jefferies’ head of distressed-debt making an investment, Bloomberg News has reported. Femenia was once the recipient of Kamensky’s preliminary danger as each Marble Ridge and Jefferies have been vying for a work of Neiman’s precious on-line industry, Mytheresa. Femenia flagged their dialog to Jefferies’ common recommend, and the financial institution disclosed the dialogue to the creditor committee.

The panicked cash supervisor then referred to as Femenia again a 2d time, asking the Jefferies banker to regard the dialog as off the books, whilst pushing Femenia to switch his recollection in their previous chat, consistent with the legal criticism. Unbeknownst to Kamensky, Femenia had began recording the decision.

“[I]f you’re going to proceed to inform them what you simply instructed me, I’m going to prison, OK?” Kamensky stated at the name, consistent with the criticism. “Because they’re going to mention that I abused my place as a fiduciary, which I almost definitely did, proper? Maybe I must move to prison. But I’m asking you to not put me in prison.”

Mytheresa Fight

Marble Ridge’s involvement with Neiman began in 2018, when the store determined to ease its heavy debt load via shuffling a few of its Most worthy property. Among them was once Mytheresa, its on-line German store. The unit was once thought to be considered one of Neiman’s fastest-growing and Most worthy at a time when gross sales at the remainder of the corporate have been suffering.

Marble Ridge complained that the transfer voided any claims that collectors would possibly have on Mytheresa as collateral — an issue if the corporate ever went bankrupt — and sued to opposite the transaction. A Texas pass judgement on pushed aside the case with out having a look on the underlying accusations concerning the switch. Meanwhile, Neiman countersued Marble Ridge for defamation; that case remains to be pending.

By May of this yr, the store had certainly long gone bankrupt, and the destiny of Mytheresa was once once more in play. This was once resolved via giving lower-ranking collectors — which would come with Marble Ridge — a stake in Mytheresa. It was once Kamensky’s participation in the committee representing the ones collectors that landed him in prison bother.

The saga compelled Kamensky, a former Paulson & Co. spouse who began his profession as a chapter legal professional, to wind down Marble Ridge. The New York-based company, which was once based in 2015 and manages about $1 billion, specializes in distressed-debt investments and the restructuring of bothered issuers.

Judge David R. Jones, who’s overseeing Neiman’s reorganisation, recommended throughout a Wednesday listening to that any agreement of the problems Kamensky faces in chapter courtroom will require that he be barred from ever sitting on an professional creditor’s committee in a Chapter 11 case.

By Matt Robinson and Katherine Doherty

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