In the volatile world of high finance, hedge funds come and hedge funds go, so there was little fanfare last week, apart from a few upset investors, when Vertical Capital, with $1.4 billion under management, suddenly announced that it was unwinding its $400 million hedge fund operation, according to commentary in The New York Times on Saturday. In a letter to investors sent on Dec. 2, Vertical said that it was negotiating with the Securities and Exchange Commission to settle a civil securities fraud case against its founder, Brett Graham, and its related brokerage firm, VCAP Securities. The commission concluded that VCAP, overseen by Graham, violated securities laws when it liquidated five collateralized debt obligations in 2012. The broker made improper bids during the liquidations because it was “in the possession of confidential information” that gave it “an unfair advantage over other bidders,” the letter said.
