Magazine article Modern Trader

Mixed Reaction to Tudor Move

Magazine article Modern Trader

Mixed Reaction to Tudor Move

Article excerpt

Mixed reaction to Tudor move

Tudor divests CPOs. It's been called everything from paranoid to smart, but the move that Paul Tudor Jones II, chairman of Tudor Investment Corp. in New York, made in November to divest an estimated $70 million from his Tudor Futures Fund is sending commodity pool operators (CPOs) scrambling to find a new home for that money.

In a letter to roughly 18 CPOs who were invested with Tudor, Jones states that it was a "very difficult decision" but CPO investors in the funds have "created an increasing number of difficulties for us." Those include the "requests for updated disclosure and performance tables from the many pool investors to further their own marketing programs."

These open pools led to the belief that access to Tudor was still available "when, in fact, (Tudor) is closed to new investments." In addition, these marketing efforts led to "regulatory exposure" via disclosure documents and dissemination of Tudor performance "and market activities in an uncontrolled way to an unknown number of people, whereas we would prefer greater privacy and anonymity in terms of our activities."

Redemption was to be complete by Dec. 31, 1991.

Although Tudor officially had no comment, several CPOs say Jones told them recent hassles with government regulators led to the decision. The $1 million Environmental Protection Agency fine (Futures, July 1990), the Commodity Exchange silver trade investigation (Futures, September 1991) and the Salomon Brothers congressional testimony that brought up his name in the Treasury auction scandal have led Jones to insulate himself from increasing scrutiny by the government and the public.

Another reason given for the move was that Jones wanted to free up equity in the Tudor Futures Fund for offshore or other investors.

Across the board, CPOs who had Tudor in their pools remarked that the end of the relationship was a sad parting. …

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