the broker/dealer's bankruptcy, fund managers are learning
about counterparty risk - the hard way
By Carolyn Sargent
With strong returns and a ballooning asset base, Amber
Capital Investment Management had great plans for the future.
Its sleek, high-design offices on the 57th floor of the
59-story Citigroup Center offer sweeping views of Manhattan and
- as a long hallway of empty offices attests - plenty of room
for more staff.
But in a few short weeks, Amber's world has turned upside
down. The firm, which at its peak last year managed $7.2
billion, lost money earlier this year and was in the midst of
restructuring when Lehman Brothers, its prime broker, declared
bankruptcy. Between $300 million and $500 million is now caught
up in Amber's London prime brokerage account - a serious chunk
of the roughly $2.1 billion the firm now manages.
Amber thought it was protected, having taken the...