As a result, CLK put pressure on NSB’s customers to sell securities, beginning in January 2012 and terminated the Service Agreement on March 14.
CLK also tried to find buyers of securities to be sold in forced liquidations from NSB customer accounts.
By mid-April, “further price declines had moved some accounts from house calls to NYSE calls” that “have strict deadlines and serious consequences.” Under applicable industry regulations, CLK had no choice but to close out any losses by May 15, 2012.
The illiquid assets in these side pocket accounts include investments such as real estate, antiques, over-the-counter (OTC) stocks, stocks with extremely low trading volume, stocks delisted from exchanges, and private equity investments.
A side pocket is a type of account utilized in hedge funds to differentiate illiquid assets from more liquid investments.
Once an investment enters a side pocket account, only the current participants in the hedge fund are entitled to a share of it.
Nicklin did not re-allege that claim in its Statement of Claim here, but CLK nevertheless took the opportunity to rebut it.
BA former star trader for Steve Cohen's SAC Capital has found less success with his post-SAC venture.