2/13/09

Ezra Merkin Refuses to Pay Out to His Investors

There is only one way to read this Bloomberg story.

Merkin declared a loss of more than 40% in both of his funds due to Madoff losses and now refuses to pay out anything to his investors.

Huh? Does he think his investors are idiots? Pay the people, you jerk. They want their money. If they decide to turn around and invest it in worthless instruments that may have value later, that is their business, not yours. It's time you liquidate and let people move on. Unless of course you really are prevaricating about the extent of your losses.... hmmm, would Ezra do that?

Here is the double-talk of the day from 740 Park Avenue.
...Investor Questions

Many of his investors have asked about the timetable for receiving distributions as the funds’ assets are sold off, Merkin said in the letters. He reiterated that the process will take years to complete, given that there isn’t an active market for many of Ariel’s holdings.

“A forced sale of those assets -- at any time, let alone now, when markets are depressed -- would not yield the values we believe inherent in the positions,” Merkin said in the letter. “Our mandate is to realize assets prudently and intelligently.”

Merkin said Ariel and Gabriel may make small initial payments to shareholders by the end of June. Most of the significant asset sales, and thus distributions to investors, won’t occur until at least next year, the letters said.

“While I am distressed by the anger that some of you have directed toward me, I understand that the financial losses that you have suffered as my investors have fed a sense of deep disappointment,” Merkin said in each letter. “I hope that the passage of time and a successful wind-down effort will assuage those feelings.”
This hoity toity attitude is guaranteed to provoke the investors into yet more aggressive action. The only way to assuage any investor at this point is to pay them their money now. Oh wait. You really don't want to pay them any of it. Never mind.

Today's whole Ezra fictional megillah from Bloomberg is here.

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