Strauss-Kahn Business Partner in Trading Dispute Before Death
Oct. 30 (Bloomberg) — Thierry Leyne, the late business partner of former International Monetary Fund Managing Director Dominique Strauss-Kahn, was in a dispute with an investor that alleged his firm made unauthorized trades with its money before his death last week.
Leyne, 49, was co-owner and chief executive officer of Leyne, Strauss-Kahn & Partners Cie prior to his death in Tel Aviv on Oct. 23. Insch Capital Management SA, a hedge fund based in Lugano, Switzerland, first complained to regulators in March about the investment by a unit of the firm in Firstcaution SA, a Swiss insurer that LSK also owned, according to letters obtained by Bloomberg.
LSK made “totally unauthorized purchases” of Firstcaution stock in August and September last year with 309,200 euros ($390,000) of Insch’s funds held in VP Bank (Luxembourg) SA, Insch said in an e-mail sent on March 28 to the CSSF, which regulates Luxembourg’s financial industry. Both Strauss-Kahn and Leyne should be investigated, Insch said.
Strauss-Kahn, 65, stepped down as chairman of Paris-based LSK on Oct. 20, three days before Leyne’s death. Strauss-Kahn bought a 20 percent stake in the financial services firm last year as part of an effort to rebuild his post-IMF life after a scandal dashed his chance to run for the French presidency.
Insch made complaints to the NYSE Euronext in Paris, where 2.3 million shares in Firstcaution are traded, in April and to the Swiss Financial Market Supervisory Authority in May, the documents show.
Two e-mails and two calls to LSK in Luxembourg weren’t returned. Vinzenz Mathys, a spokesman for Swiss regulator Finma, and Daniele Berna-Ost, spokeswoman for CSSF, declined to comment. Two calls and an e-mail to a spokeswoman for Strauss- Kahn in France weren’t answered. NYSE Euronext said it doesn’t comment on individual cases.
The dispute was reported by the Wall Street Journal earlier today.
‘Wider Operation’
LSK’s purchase of the shares with Insch funds were part of a wider operation that was “utterly outrageous and abusive” in nature, Christopher Cruden, Insch’s chief executive officer, said in an e-mail sent to Luxembourg’s regulator April 7.
“We stand by our decision, taken in March 2014, to report LSK & Partners to the regulatory authorities and to the relevant stock exchange,” Cruden said in an e-mailed response to questions. “We would, and will, do precisely the same again if confronted by similar circumstances.”
Only 10 shares of Firstcaution typically traded on a daily basis in 2011 and there were no trades in 2012 or in the first two months of 2013. Volume then spiked last year, with tens or hundreds of thousands of shares changing hands on single days. The stock was at 7.99 euros on Oct. 27, valuing the company at 18.3 million euros.
Cruden said neither the firm nor its clients lost money after Leyne agreed to reimburse Insch in January.
While LSK held a majority stake in Firstcaution, it has not had any influence on an operational level, said Werner Vogt, a spokesman for the insurer. The company is putting together a group of investors to buy out LSK’s stake, he said.
–With assistance from Fabio Benedetti-Valentini in Paris and Hugo Miller in Geneva.
To contact the reporter on this story: Will Wainewright in London at wwainewright@bloomberg.net To contact the editors responsible for this story: Charles W. Stevens at cstevens@bloomberg.net; Edward Evans at eevans3@bloomberg.net Mark Bentley, Edward Evans
