PJT Partners' shares fall deeply following the arrest of former executive

By Staff Writer

Mar 30, 2016 05:38 AM EDT

On Monday, Andrew Caspersen, a previous partner of PJT Partners, was arrested for committing a Wall Street fraud. The US prosecutors accused Caspersen of defrauding $95 million from investors. The news of Caspersen arrest pushed down the boutique investment bank's shares by as high as 25% during the Monday trading session.

Caspersen purportedly coordinated an investment vehicle called Irving Place lll SPV, which had no assets other than a bank account in his name, and swindled $25 million from investors. He also sought to deceive investors for $70 million more, THE WALL STREET JOURNAL said. The US Securities and Exchange Commission has not released the identities of fraud victims. Caspersen was employed at PJT Partners' Park Hill Group since 2013.

Stephen Schwarzman, chief executive officer and chairman of Blackstone Group, poses 6.6% of shareholdings in PJT Partners. The boutique investment bank was managed by Paul J. Taubman, a former investment banker at Morgan Stanley. The bank became a public firm in October 2015.

"Stunned and outraged to learn of the fraudulent circumvention of the firm's compliance policies and ethical standards by Andrew Caspersen," a spokeswoman for Park Hill said the journal. The bank has terminated Caspersen from his office and also organised an internal investigation and reported the potential fraud to the US authorities, she added.

Meanwhile, a representative of Blackstone said that the fraudulent issue surprised Blackstone's management team. He added that Blackstone will cooperate with PJT in all matters concerning the investigation of the fraud act.

Newsmax cited Preet Bharara, US Attorney, who said that Caspersen created duplicate email addresses, produced fake domain names and developed imaginary financiers to manage the shell company. Caspersen used the investment fund for personal utility, traded securities in his brokerage account, and lost all the money in trading options, prosecutors noted.

According to a source, Caspersen started misleading investors while he was an employee at Park Hill, which was then owned by Blackstone Group. Park Hill was sold to PJT in 2014. The fraud issue was brought to PJT notice on March 14 by an unidentified third party, which prompted PJT to hire an external counsel and alert the US authorities in Manhattan, the source added.

 Meanwhile, Law Offices of Howard G. Smith announced a deep study into the fraud issue by Andrew Caspersen on behalf of PJT's wounded investors. The victims are allowed to conduct the law firm to talk about their legal rights and on means to recover their losses. Shares of PJT fell 11.8%, after falling as high as 24.3% to a historical low on Monday morning.

PJT is cooperating with the US authorities to help its victimised investors to recover from their losses. Investors are hopeful that they will have their justice.

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