How one of the world's oldest hedge funds went bankrupt

financialpost.com:

The order came down from George Weiss, hedge-fund pioneer: Sell. Sell it all.

The fund was closing, he said, near tears, to a group of portfolio managers over Zoom. Employees were floored.

After 46 years, his eponymous investment firm — founded in 1978, when the Dow was bumping along 800 — was spiralling toward oblivion.

His stunning directive on the morning of Feb. 29 marked the culmination of a series of missteps — including paying executives six-figure bonuses while on the brink of insolvency — that sank one of the world’s oldest hedge funds into bankruptcy last month.

Traders spent that wild Thursday offloading billions of dollars of positions. As they made calls to bank trading desks, employees fielded inquiries from recruiters while word of trouble spread.

Later, as George Weiss was bidding staff goodbye in person, he described the firm as a family.

That’s not the way employees and creditors are likely to see things. While the firm’s rapid unwinding limited losses for fund investors, Weiss Multi-Strategy Advisers LLC’s collapse leaves some staff standing to lose more than US$1 million in deferred compensation. Its biggest creditor is bracing for a fight over more than US$100 million in unpaid debts.

Interviews with about two dozen people familiar with Weiss and court documents depict a collapse caused not by a disastrous trade, but rather years of high spending that the firm failed to rein in even as assets fell and performance faltered.

George Weiss, 81, and chief investment officer Jordi Visser, 57, ran the US$2.3-billion firm with the glitz of larger multi-strategy rivals, but without the discipline, the ruthlessness to cut losing traders or the ability to push more costs onto investors, according to the people