That deal still has not closed. . Photographer: Luke Sharrett/Bloomberg For the low-profile Chatham, American Media has become a high-profile headache. Washington, D.C.--(Newsfile Corp. - 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. Chatham was the favorite in the McClatchy auction, but the New York hedge fund Alden Global Capital expressed strong interest last week, when a lawyer representing the firm said at a bankruptcy hearing that Alden was prepared to top any other bid. McClatchys troubles can be traced to 2006, when it bought its much larger rival, Knight Ridder, then the second-largest newspaper chain in the United States, for $4.5 billion, plus the assumption of $2 billion in debt. The hedge fund has become a major player in the news industry. The company regrets any distress that may have been caused to the Grimstads by the public filing of the litigation against them, Chatham-controlled iPayment said at the time. From shortly after the merger to the end of 2018, McClatchys work force was cut from more than 15,000 full-time employees to around 3,300, according to public filings. In recent months, Postmedia closed approximately 15 community publications and laid off 120 employees in response to the Covid-19 pandemic, The Toronto Star reported. In 2018, Canadas Competition Bureau, a law enforcement agency that oversees commerce, opened an investigation into the transaction for possible anticompetitive conduct and has searched the offices of both Postmedia and Torstar. Long-term clients include the state pension fund of Chathams home state, New Jersey. The threat was blunt: Back off, or there will be trouble. And given the strains in the print-media business, the strong price of the debt is difficult to explain, traders say. 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. Along with the public pension funds, four other private pension fundsincluding those for Ford and Toyota Motors employeeshave had investments with Chatham, according to financial research firm Preqin. Jay Youngdahl, a former Harvard researcher who has served as a steelworkers pension trustee, said state officials may be able to take action to try to protect retiree investments. Chatham Asset Management LLC and its founder Anthony Melchiorre have agreed to pay more than $19.3 million to settle charges in connection with improper . (One of the people whom Chatham installed on the Postmedia board was Daniel Rotstein, a consultant for American Media.). The information you requested is not available at this time, please check back again soon. Over that time, Chatham has sunk even more money into one of its most controversial investments: National Enquirer parent American Media, which accounts for about 16%, or $400 million, of the $2.5 billion that Chatham manages in its main fund and related accounts. Freelance budgets have shrunk at Postmedia, and travel expenses have been severely curtailed, the people said. They stay away from editorial matters but tend to focus on finding efficient ways to cut costs, according to two of the people. Contact. The hedge fund is run by Anthony Melchiorre, a GOP donor whoreportedlymetwith the president and AMI CEO David Pecker at the White House soon after Trump took office. CHATHAM ASSET HIGH YIELD MASTER FUND, LTD. CHATHAM ASSET PRIVATE DEBT AND STRATEGIC CAPITAL OFFSHORE FUND II, LP, CHATHAM ASSET PRIVATE DEBT AND STRATEGIC CAPITAL FUND II, LP. containing a link to download the .zip file of the CSV file(s) you requested. At least one executivethe one Cohen and Pecker sparred withhas accused the New Jersey firm of market manipulation. 130 E. Randolph St. Tony Ridder came to the newsroom and spoke, although he was such a stone of a personality I dont specifically remember it. to see more advanced email alert options such as selecting any type of Now he was working on behalf of Chatham Asset Management, a $4.3 billion hedge fund that owns the National Enquirer. "We remain vigilant in rooting out such misconduct in the marketplace, including in the fixed income sector, where investments can be less liquid.". 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. "As our order finds, Chathams trading in AMI bonds had the effect of increasing the prices of those generally illiquid securities in a way that was disconnected from economic reality," said Sanjay Wadhwa, Deputy Director of the SECs Division of Enforcement. Altogether, the company has cut over 1,600 employees since 2016, or 38 percent of its staff, based on company filings. I would bet, in fact, that not one Star employee not even president-publisher-secretary and head of security Mike Fannin will ever see him. From 2016 through 2018, one Chatham-advised client sold certain American Media Inc. bonds while a different Chatham-advised client purchased the same bonds through various broker-dealers, according to the SEC. 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.. It even offered lower yields than some blue-chip companies. Luxury Homes for Sale in Cabris, Provence Alpes Cte D'azur, France Wall Streets main regulator has been looking into opaque markets since the financial crisis, uncovering a wide swath of bad behavior from lying salespeople to bogus quotes from brokers. Newsonomics: Six takeaways from McClatchy's bankruptcy The SEC would like to thank the Financial Industry Regulatory Authority for its assistance with this matter. Grimstad knows what its like to be under a tabloid-like glare. Best known for its luridEnquirerheadlines (Aliens Are Living in My Toilet), AMI has been beset by a difficult environment for print publications. Such wagers have come under increased scrutiny from regulators in the last year. Finra, the brokerage industrys main watchdog, subsequently concluded its review, and its unclear what if anything resulted from it. Chrome Extension. The court and regulators must approve the deal. 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. A March 2019 Fortune magazine story said Melchiorre, who is either 51 or 52, was raised in Chicago, studied economics at Northwestern and got an MBA from the University of Chicago. They wanted to kill a lawsuit by the former head of another Chatham company. Pressure has been building. As weak as these papers are and as far as they have fallen, they still throw off lots of cash. Behind the salacious headlines was an issue thats drawing scrutiny from regulators: bond prices. In 2018, American Media announced the sale of the tabloid to the family that founded the Hudson News chain of newspaper and magazine shops. The SEC has increased its focus on the valuation of securities across the market, said Jacob Frenkel, a lawyer at Dickinson Wright. . The headquarters of Chatham Asset Management in Chatham, N.J. Chatham itself has been undergoing its first ever exam by the SECs inspections division, according to people familiar with the 16-year-old firm. A Chicago-area kid who studied economics at Northwestern and got an MBA from the University of Chicago, his high-toned education didnt reduce the intensity of the former high-school football star. The New Jersey office building in which Chatham Asset Management has its office. FORTUNE may receive compensation for some links to products and services on this website. American Media acquired her story for $150,000 and never published it, a practice known as catch-and-kill. --With assistance from Neil Weinberg and Matt Robinson. The companys main office is on the second floor of a nondescript, two-story office building in Chatham, NJ, 28 miles west of the Manhattan skyscrapers. SEC Charges Chatham Asset Management and Founder Anthony Melchiorre for Cohens assignment: Get Carl Grimstad, the recently fired CEO of payments processor iPayment Holdings, to the table. What it does, apparently, is make its clients lots of money. A spokeswoman for Cohen declined to comment, and a spokesman for American Media and Pecker didnt respond to requests for comment. Melchiorre, 55, owned roughly 70 percent of the company during the relevant period and is the managing member of the general partner entity for each of the funds. Posted in Uncategorized | 5 Comments. The consultant reviewed Chatham's trading annually for compliance with applicable laws and did not alert the firm to any issues. An award-winning team of journalists, designers, and videographers who tell brand stories through Fast Company's distinctive lens, The future of innovation and technology in government for the greater good, Fast Company's annual ranking of businesses that are making an outsize impact, Leaders who are shaping the future of business in creative ways, New workplaces, new food sources, new medicine--even an entirely new economic system. Their bonds, though, havent suffered. It declined to comment further. I was there. Shadowy and scaryThat's the prospective new owner of The Star and the With roots going back to 1857, McClatchy, a consistent winner of top journalism awards, was one of the last major family-run news publishers. We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. After sparking federal prosecutors ire for its role in burying Trumps secrets shortly before the 2016 election, the company has drawn international attention for its war with Jeff Bezos over its expos of his extramarital affair. Well, this company, Chatham Asset Management, doesnt do a lot that would make it want to call attention to itself. 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. Thanks, Tracy. Anthony Melchiorre has an ownership stake in Chatham Asset Management, LLC of between 50% and 75%. AMIhas deniedit helped Trumps campaign, although Pecker was recently granted immunity as part of the Cohen probe. Behind the salacious headlines was an issue thats drawing scrutiny from regulators: bond prices. In October 2016, a New Jersey hedge fund assumed ownership of Canadas largest newspaper chain with very little fanfare. 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. I can almost guarantee you there will be staff cuts at most or all of those newspapers. Something other than fundamentals are playing a huge factor in those bonds., In response to questions about the prices, Melchiorre sent a statement through a representative: We have tremendous conviction in our fundamental thesis on late stage media consolidation in North America and competitors are free to express opposing views.. Pressure has been building. All Rights Reserved. Owning a majority of the approximately $1.2 billion in outstanding principal amount of 11% first lien senior secured notes due 2026, and virtually all of the approximately $439 million in outstanding principal amount of 13% second lien senior secured notes due 2027. But just on the outside chance he does come around, would somebody please take his picture and send it to me? Chatham had waited patiently for Thursday, and now its in the catbird seat, waiting for the Chapter 11 bankruptcy proceedings to play out and then take charge. Federal regulators have been asking questions, too. 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 Securities and Exchange Commission said the trades were executed at prices that lifted the value of American Media Inc. bonds at a significantly higher rate than . Seaport Global defended its practices. A similar story has unfolded at newspaper publisher McClatchy, which has posted annual losses since 2015. Chatham did not respond to questions about how exposed taxpayers and pension systems might be to AMI and any financial consequences of its legal entanglements. Performance numbers calculated through 2022-05-16. The next year, Seaport received internal complaints that brokers there agreed to buy bonds from Chatham with the promise the hedge fund would repurchase them at higher prices, according to people with knowledge of the situation. Thats because they are losing to him.. Yet its recent focus on tough-to-trade investments has given some clients pause, and initially drove off investors such as the Ohio state pension fund. A similar story has unfolded at newspaper publisher McClatchy, which has posted annual losses since 2015.
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