March 2, 2016
Photo: Michael (CC BY 2.0)

Forbes this week published a lengthy profile on Lone Star Funds’ founder John Grayken, who it calls “the most shadowy” of the “new powerful class of ‘shadow’ bankers.”

Read the full article here: http://www.forbes.com/sites/nathanvardi/2016/03/01/the-billionaire-banker-in-the-shadows/#5a72d1111f4d

Forbes details the controversies that have erupted from the firm’s predatory business practices (the German press reportedly “called Lone Star ‘the Executioner from Texas’ after the firm bought a boatload of non performing loans that resulted in homeowner foreclosure proceedings”) and persistent staff turnover (“over the years a parade of talented partners, almost anyone Grayken has ever worked with closely, have left the firm because they either felt shortchanged financially or had disagreements with Grayken”).

The profile also delves into the relationship between Lone Star and Hudson Advisors, its affiliated servicer (see our May 2015 letter to the SEC on this issue here) that Forbes calls “a backdoor way for Grayken to personally extract extra profits from Lone Star’s hefty asset base.”

Forbes reports that, beyond the “rich” management and incentive fees Lone Star charges limited partners, Hudson charges Lone Star an “average annual management fee of 0.55% of assets.”