Sue, Chatham lawyers warned, and well drag your family into this, according to court testimony. Subscribe for access to the latest digital and special editions. Despite the companys financial distress, its bonds traded near par until December, and after dropping, have been climbing back. The guy who will be drawing the blood, Anthony Melchiorre, apparently is a piece of work. The McClatchy chairman, Kevin S. McClatchy, the great-great-grandson of its founder, has said the companys inability to meet its pension obligations tipped it into bankruptcy. The SEC has increased its focus on the valuation of securities across the market, said Jacob Frenkel, a lawyer at Dickinson Wright. Chatham is a hedge fund, and, like most hedge funds, it is interested in just one thing: Big bucks. Sue, Chatham lawyers warned, and well drag your family into this, according to court testimony. The 2016 presidential campaign had just ended, and Michael Cohen was fresh off handling hush money for Donald Trump. Chatham Asset Management Increases Offer to Acquire R.R. There are often clauses in agreements between pension funds and hedge funds that give states certain rights and recourse if they believe retirees money has been invested in companies engaging in criminal activity, he said. Although not physically imposing, the Fortune story said, Melchiorre could be foul-mouthed and loud, and would berate fellow traders as he bopped around the trading floor in his stocking feet.. To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market. Chatham Asset Management to Pay $19.3M to Settle SEC Charges. Michael Eisner came to the newsroom. In the same period, it spent nearly $127 million on debt payments. Sign up and get the best of News delivered straight to your email inbox, free of charge. 2023 BridgeTower Media. The announcement, which signals an end to 163 years of family ownership, underlines the growing influence of the finance industry on American newspapers. Products. They wanted to kill a lawsuit by the former head of another Chatham company. . In the interest letter to Vericast CEO John O'Malley, Chantham Managing Member Anthony Melchiorre detailed CAM's longstanding investments in the company, including: Serving as the lead backstop. Subscribe to WhaleWisdom to view all filing data A similar story has unfolded at newspaper publisher McClatchy, which has posted annual losses since 2015. The SEC order found that these trades were executed at prices Chatham and Mr. Melchiorre proposed and had the effect of increasing the price of the AMI bonds at a significantly higher rate than the prices of similar securities. John Kasichs appointeescommitted$125 million to Chatham. Hedge fund Chatham Asset Management and its founder, Anthony Melchiorre, agreed to pay more than $19 million to settle US allegations that the firm improperly traded bonds in a media company that owned the National Enquirer.. The family-owned publisher of The Sacramento Bee and The Miami Herald announced the winner of its bankruptcy sale: Chatham Asset Management, the owner of The National Enquirer. Since Chatham took a majority stake in Postmedia, the company has cut its work force, shuttered papers across Canada, reduced salaries and benefits, and centralized editorial operations in a way that has made parts of its 106 newspapers into clones of one another. Its bonds staged an improbable rally last year, charting a steady climb over 50% from 80 to 125 cents on the dollar. Their bonds, though, havent suffered. The New York Post put the story on its front page under the headline Frisky Business. (Grimstad has called those allegations false and meritless.). But opting out of some of these cookies may have an effect on your browsing experience. SEC Charges Chatham Asset Management and Founder Anthony Melchiorre for Grimstad knows what its like to be under a tabloid-like glare. A spokeswoman for Cohen declined to comment, and a spokesman for American Media and Pecker didnt respond to requests for comment. Hedge Fund Chatham Settles SEC Case on Improper Bond Trading (1) Andrew MacLeod, the chief executive of Postmedia, said that Chatham was not a day-to-day operator of the business, and that the cost cuts were all natural outcomes of a legacy business thats been in structural decline. He added that when Chatham came on board in 2016, it was one of the few financial players willing to take a risk on a newspaper business. While he was wrangling with Chatham, news trucks were parked outside his house for days. Chatham said at the time that the allegations were baseless and without merit. Yet its junior bonds offer yields comparable to more senior securities. Chatham Hedge Fund Has the Winning Bid for McClatchy Newspapers Anyone can read what you share. Snap CEO Evan Spiegel wiped out over $10 million in student loans for an entire graduating class. But Im not now. Anthony Ralph Melchiorre - Chatham Asset Management, LLC Currently investing in Vericasts term loan facility due 2026. (The answer was no, and I retired on June 30, three days after the McClatchy deal closed.). At Hedge Fund That Owns Trump Secrets, Clashes and Odd Bond Math If the business is not profitable, theyll do what they need to to right-size it., He added: If they look at the assets they are buying, part of their core purpose is to serve their community. I wouldnt even begin to consider owning it at that level. [1]: Alden Global Capital controls roughly 200 outlets through its newspaper chain, MediaNews Group. Named after the leafy suburb where its based, Chatham has posted average annual returns of about 10%, trouncing many of its competitors. ", A representative for Chatham said in an email that "Chatham sought, received and followed advice from an independent compliance consultant about the manner of executing the trading in question. During the last five years, taxpayers in New Jersey, Ohio and California have owned large financial stakes in the owner of the media company that allegedly helped the Trump campaign bury negative stories, according to documents reviewed by Capital & Main and MapLight. Tenth Floor The firm and its founder, Anthony Melchiorre, have a reputation for hard-edged business. Chatham had the winning bid for the McClatchy Company, the family-run publisher of The Sacramento Bee and other papers. Chatham haswarnedthat its investments are risky and that a client may lose its entire investment in a troubled company. In early 2018, private equity giant BlackstoneremovedChatham from one of its major investment funds. Vericast recently announced several growth initiatives, including investing in technology and hiring for more than 250 new positions across the organizationits largest investments in innovation and employees since the companys 2020 launch. That deal still has not closed. Offers may be subject to change without notice. Sign-up Postmedia, where Pecker sat on the board until last August, has posted annual losses for most of the past decade. There are people who dont like him. Main Office That's why all these financial players Chatham Asset Management here, Alden Global Capital, Fortress Investment Group, and Apollo Global Management elsewhere find newspapers such a hospitable environment. The Securities and Exchange Commission today charged New Jersey-based Chatham Asset Management LLC and its founder, Anthony Melchiorre, in connection with improper trading of certain fixed income securities. Two other old-line media investments, Postmedia Network Canada Corp. and McClatchy Co., have become central to Chatham and its thesis that itll make money in an industry others are fleeing. Hedge funds are certainly profit-oriented, Mr. Longo said. This much is sure: Chatham founder Melchiorre, 51, has a formidable reputation. These cookies do not store any personal information. Yet, over the years questions have swirled around Chatham. Shortly after, Postmedia announced it would shut down all 24 newsrooms it had acquired, except for one, according to public filings. Behind the salacious headlines was an issue thats drawing scrutiny from regulators: bond prices. Despite the macroeconomic warnings of a recession and job[], A Cherry Hill-based financial institution is back on top of Small Business Administration lenders in New Jerse[]. Internal hedge fund records from late 2017 show that AMI investments comprised 23 percent of the Chatham Asset Partners High Yield Funds portfolio. Hedge funds and private equity firms have had a growing presence in the news industry, to the chagrin of press advocates who argue that financial firms do not make civic-minded stewards of a business built largely on holding the powerful to account. That kind of showing helped the firm attract $300 million from investors this quarter, a person familiar with the matter said. $5,850,800. Here are some repayment options, Streaming giants required to contribute to Canadian content as Bill C-11 becomes law, How becoming common-law or getting hitched changes tax-filing season, {{data.symbol | reutersRICLabelFormat:group.RICS}}, {{ stock | formatPrefix }}{{ stock.netChng | formatNetChange }}, Katherine Burton, Sridhar Natarajan and Shahien Nasiripour. The ugly litigation with the tech executive was resolved with a less-than-remorseful apology and a multimillion-dollar payday for Grimstad. The merger took place in November 2017, about a year after Chatham took majority ownership. A Chicago-area kid who studied economics at Northwestern and got an MBA from the University of Chicago, his high-toned education didn't reduce the intensity of the former high-school football star. Within weeks, the notes were back at about par. The information you requested is not available at this time, please check back again soon. to see more advanced email alert options such as selecting any type of Photographer: Luke Sharrett/Bloomberg Hedge funds and private equity companies have become a force in the news industry. Quantifying sustainability the numbers, the data, and the people, Valuing Banks: Hidden Losses Versus Assets, Research for Institutional Money Management, Global Fixed Income: Volatility and Uncertainty Here to Stay, For institutional investors, ETFs can make meeting liquidity needs easier, Gold: the most effective commodity investment, 2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios, Ten ways retirement plan professionals add value to plan sponsors. Which is concerning., Under Hedge Fund Set to Own McClatchy, Canadian Newspapers Endured Big Cuts, https://www.nytimes.com/2020/07/16/business/media/hedge-fund-chatham-mcclatchy-postmedia-newspapers.html. Now he was working on behalf of Chatham Asset Management, a $4.3 billion hedge fund that owns the National Enquirer. The firms assets have doubled in the past three years. Washington D.C., April 3, 2023 The Securities and Exchange Commission today charged New Jersey-based Chatham Asset Management LLC and its founder, Anthony Melchiorre, in connection with improper trading of certain fixed income securities. Yes, Tony Ridder came to The Star newsroom when KR bought the paper. And as it happened, the hedge fund owned the tabloid, the National Enquirer, that he had just used to try and catch and kill stories about the future president. Any McClatchy employees hoping that Chatham might not be as bad as the hedge fund Alden Global Capital, which has decimated the Denver Post and other papers in its stranglehold, should consider this: Chatham is the majority owner of American Media, which owns the tabloid National Enquirer which hardly recommends Chatham as a potential restorer of the 29-paper chain to the newspaper industrys top ranks. Then theres American Media. Its no wonder Chathams side would enlist Cohen, long known for his doggedness on behalf of Trump. Even with the cuts it has endured over the past 15 years, The Bee remains the most significant source of original reporting and enterprise in our community, Sacramentos mayor, Darrell Steinberg, wrote in a May letter to the bankruptcy court. SEC Charges Chatham Asset Management and Founder Anthony Melchiorre for Named after the leafy suburb where its based, Chatham has posted average annual returns of about 10 percent, trouncing many of its competitors. Sad. State officials are well-positioned and duty-bound to investigate allegations of potential wrongdoing in hedge fund portfolios, said former Securities and Exchange Commission attorney Edward Siedle. The SECs order also finds that Chatham and Melchiorre calculated the net asset values, or NAVs, of their client funds holdings using pricing data that was based, in part, on the trading prices of the securities. Their bonds, though, havent suffered. Use the CB Insights Platform to explore Chatham Asset Management's full profile. Its a fair question.". Create Email Alert, ***Log In or Sort: $5,409,230. Clearly, the writing is on the digital wall. Enter your email address to subscribe to this blog and receive notifications of new posts by email. Chatham and the Enquirer 's publisher, David Pecker, had turned to. On Friday he ordered remaining ones back to the office. He built his stature as a temperamental money-maker at the white-shoe firm. They make money for their clients.. The state has said its exploring its options in light of Bezoss claim that American Media tried to blackmail him. And in 2006, when McClatchy bought out Knight Ridder, McClatchy C.E.O. When completed, an email will be sent to the email address you specify Your California Privacy Rights/Privacy Policy. In addition to being a principal owner of American Media Inc., the parent company of The Enquirer and other tabloids, it is a major investor in Postmedia, the publisher of Canadian newspapers including The National Post, The Montreal Gazette and The Ottawa Citizen. Cohens assignment: Get Carl Grimstad, the recently fired CEO of payments processor iPayment Holdings, to the table. Chatham, which manages about $4 billion in assets on behalf of its clients, is expected to become the majority owner in the third quarter of the year, McClatchy said, and the publicly traded newspaper company will go private. To contact the reporters on this story: Katherine Burton in New York at kburton@bloomberg.net;Sridhar Natarajan in New York at snatarajan15@bloomberg.net;Shahien Nasiripour in New York at snasiripour1@bloomberg.net, To contact the editors responsible for this story: Caroline Salas Gage at csalas1@bloomberg.net, ;David Gillen at dgillen3@bloomberg.net, David Scheer, Canada joins U.S., U.K. in diplomatic boycott of Beijing games, Canada's ambassador to China steps down after Huawei crisis, Trudeau weighs auto-content rules as next U.S. trade flashpoint. John Longo, a professor at Rutgers Business School, said such ownership did not necessarily mean a disregard for journalism. This story was co-published with MapLight and Capital & Main. State pension funds invested millions in hedge fund that controls Newsonomics: Six takeaways from McClatchy's bankruptcy They are scrappy, and they arent afraid of litigation to defend their investments, said Leon Cooperman, a recently retired hedge fund mogul who is a Chatham investor and part owner of American Media, the Enquirers publisher. Found 4 colleagues at Chatham Asset Management. Its no wonder Chathams side would enlist Cohen, long known for his doggedness on behalf of Trump. The California state pension system has been planning to exit all of its hedge fund investments and has been asking Chatham to sell holdings so it can return about $200 million. 5.Anthony Melchiorre, age 55, resides in Short Hills, New Jersey. Thats exactly what happened. Soon after, he crossed the Hudson River to set up his own hedge fund in Chatham, N.J. Mr. Melchiorre manages over $4 billion in assets for clients through various funds, including some listed under a Cayman Islands address, where more favorable tax rates apply. Altogether, the company has cut over 1,600 employees since 2016, or 38 percent of its staff, based on company filings. Chatham Asset Management and its founder, Anthony Melchiorre, have agreed to settle charges they violated U.S. laws designed to protect investors when they bought and sold bonds in. For the low-profile Chatham, American Media has become a high-profile headache. The investigation remains active, according to an agency representative. He built his stature as a temperamental money-maker at the white-shoe firm. The notes dont pay regular interest in cash, a sign of their inherent riskiness. Journalists employed by McClatchy, as well as the mayors in Lexington, Ky.; Sacramento; and Miami three cities served by McClatchy papers pushed for local, civic-minded ownership of the chain. The SECs order finds that, from 2016 through 2018, one Chatham-advised client sold certain American Media, Inc. (AMI) bonds while a different Chatham-advised client purchased the same bonds through various broker-dealers. Anthony Melchiorre has an ownership stake in Chatham Asset Management, LLC of between 50% and 75%.