Deephaven Capital Management

Deephaven Capital Management, LLC was a subsidiary of Knight Capital Group that managed various hedge funds. The company was later shutdown due to poor performance blamed on prevailing macro-economic environment.^[1]

Deephaven Capital Management was established in 1994 with $5 million in assets by Irvin Kessler.^[2] It focused on event-driven funds in addition to five additional funds managed from its offices in Minnetonka, London, and Hong Kong.^[1] At its peak, the company managed $4 billion in assets in six different hedge funds.^[3] Kessler sold the company in 2000 to Knight Capital Group although he continued to work there for a few more years before leaving to found Provident Advisors and later Walleye Capital.^[2]

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 (PIPE) offerings.^[4] 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.^[4][5] The portfolio manager also paid $110,000 as part of the civil penalty.^[5]

In late 2008, Deephaven froze its Global Multi-Strategy Fund with assets of $1.6 billion.^[6] The fund lost 32% in 2008, which resulted in investors requesting to withdraw 30% of their funds.^[7] 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.^[8] 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.^[9][7] 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.^[10]

• Official website^{[dead link]}