1847 WordsAug 14, 20108 Pages

On January 5, 2000, Phoenix Research and Trading, a Toronto-based hedge fund management group, issued a hastily prepared press release. The firm stated that one of its traders, Stephen Duthie, had lost $7.4 million in unauthorized trading in its publicly traded Phoenix Hedge Fund LP, with the losses originating from a feeder fund called the Phoenix Fixed Income Arbitrage Limited Partnership.
Several days later, the firm clarified its earlier statement: The loss suffered by the fixed-income fund was actually $125 million. The firm's principals, moreover, were proposing the dissolution of the partnership and hiring Ernst & Young to undertake a "forensic investigation.” The firm added that it was hiring a private investigator to locate*…show more content…*

The loss on a pre-established $3 billion note position would have reached approximately $60 million between early December and Christmas.
By December 31, Duthie says, he was no longer willing to nurse his losing position. He claims that after some fractious words with his superiors, he simply did not come in to work after the long holiday weekend. Duthie claims that Phoenix principals Mark Kassirer and Ron Mock then "tried to throw the entire $3 billion position on the market during one day's trading and thereby created added losses.” In a document released March 9, 2000, Phoenix officials confirmed that $3 billion in U.S. Treasury securities were liquidated in early January.
When Phoenix announced the initial losses to the public, Duthie attests he was still in Toronto—aghast at what he was reading in the newspapers, but only willing to communicate with his former employer indirectly via an intermediary. On January 6, he left a somewhat apologetic voice-mail message at the firm, but stopped just short of admitting guilt for having done anything wrong. He then visited the Ontario Securities Commission (OSC), suggesting that it retrieve certain documents from his prior employer to help prove his innocence.
Blame game
The case raises a number of unanswered questions. How much, if anything, did Duthie's superiors know about the fund's trading

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