Whatever Happened to Solengo?

Solengo Capital, a hedge fund, was the center of a burst of business for copyright lawyers a year ago.

Now, I understand, the fund breaths no more. Its assets have been purchased by another operation, and its founder given the could-mean-anything but really-means-nothing title of "consultant."

Even the most faithful of my readers may need a refresher course, and a couple of links like this one.

The gist: Brian Hunter was the trading not-quite-master mind who put dynamite beneath the floor boards at a futures-oriented hedge fund named Amaranth in 2006. He lost $6 billion of other people's money.

So, with that good old Canadian spirit, he got right back on his horse and created Calgary based Solengo the following year.

Solengo started sending out its marketing brochure as an unsecured Adobe Acrobat document through cyberspace. I can't say how widely, but widely enough so that a couple of alert bloggers got it and posted it. That's when the copyright lawyers got involved, determined to ensure that only those Hunter selected for viewing his brochure, should be allowed to view it.

Given the nature of the internet, the effort was doomed to failure in fact, even despite some successes in court. Anybody with any curiosity in the matter has long since had the brochure on their hard drives.

Flash forward. A Bloomberg story yesterday informs us that Mr. Hunter is now a consultant for a Boston-based operation called Peak Ridge Capital.

Peak Ridge got its start in November, and it appears to have had a good first five months. Judging from the story by Saijel Kishan, the real powers-that-be at Peak Ridge want it to be known that Brian doesn't trade for them, nor does he run the risk management office. He consults. He "devises trading models and strategies," which presumably the actual traders are then free to ignore.

Peak Ridge has "bought the assets" of Solengo, we learn in paragraph five. What did that amount to, I wonder? A desk, a rolodex, and some rolaids?

Another tidbit from the story I have to mention: Kishan refers to Solengo as a "hedge fund firm that Hunter tried to start...." His sources are acknowledging, then, that Solengo never really got underway.

Maybe because they were too busy in fruitless litigation over a brochure, and wasted their trading kitty on legal fees?

So that's what happened to Solengo.

Fossil Fuels

I'm going to give you the benefit of three stories hot off the wires without much of a common thread to them, except that (a) if you get your news from television, or just from the front page of your local paper, you probably won't hear of any of these, and (b) they all involve the world's fossil-fuel energy industries.

1) Moody's upgrades Qatar. Moody's Investor Service said that it now regards Qatar Petroleum's senior unsecured bonds as an Aa2 investment, an upgrade from an Aa3. Qatar Petroleum is a government-related business, but its bonds aren't sovereign bonds. Still, Moody's says the reason it is more confident in Qatar Petroleum now is that it is more confident in Qatar. More confident than ... when? Well ... more confident than it was in February, which was the heighth of a Qatar-related terrorism scare.

2) China to go homegrown. An agency headquartered in Beijing, the National Development and Reform Commission, has put out a draft report on how to encourage the homegrown petroleum and petrochemical equipment industries. It isn't obvious how much clout within the government as a whole this commission has, or what effects this development will have upon the huge energy market that the PRC is, and the even more huge market it promises to become. Still, it is evidence that "energy independence" as a policy goal isn't a distinctively American idea.

3) Civil actions against Amaranth, some of its traders. Meanwhile, in the US, both the Federal Energy Regulatory Commission (Ferc) and the Commodity Futures Trading Commission (CFTC) have this week brought actions against the corporate shell of Amaranth, and against its infamous 6-billion-dollars-losing trader, Brian Hunter. Hunter's disastrous trades were in natural gas futures. FERC has jurisdiction over the markets for the gas itself, the CFTC has jurisdiction over the market for commodity futures contracts. Mr. Hunter seems to have been trying to play them off against one another to avoid such an action, but to no avail. He seems only to have persuaded them to team up.

To what does all this add? Damned if I know. I put them together because they illustrate the difference between the speculation around an industry and the fundamentals, between the wagging tail and the standing dog. My instinct is that the speculators (like Mr. Hunter) don't really drive the fundamentals. Whether or not Qatar's energy-related facilities are well-protected from terrorist strikes: that's a fundamental. That's the dog that wags the tail of speculation.

The news from China is somewhere in the middle of the spectrum: whatever plans they have for stiffening up their home industry are too tentative to be fundamentals yet, but the issue that commission addressed does seem to be more real than the personal fate of Mr. Hunter. So I guess the lesson from my three random tidbits is simply the difficulty, in the crush of industry news, is distinguishing which is which. What's the dog, and what's the tail?

More on the Solengo Brochure

For background, see Monday's entry.

The one-paragraph version is that Brian Hunter, who lost billions on natural-gas related speculation last year working for a hedge fund named Amaranth, is creating a new fund, to be called Solengo. He e-mailed the marketing brochure for this new project, and (since little effort was made to avoid this) bloggers got hold of it. Hunter hired lawyers, a firm with the Kiplingesque name Kobre Kim, to start suing those bloggers.

So what's new? The Cobra and Kim have, to give them credit, had some success getting the pamphlet removed from various places. For example, if you use the url that I gave you for it on Monday, you'll get to an error notice. "The page you are attempting to access has been removed because it violated Angelfire's Terms of Service."

But Angelfire seems to have reconsidered, or to have failed to notice ... this.

Or perhaps it was just that when the lawyers aren't actively breathing down its back, AngelFire isn't concerned about the particular "terms of service" at issue. By now, of course, anyone who is interested has had plenty of time to download it. If you don't have it in your harddrive yet, ask somebody who has, and the old e-mail trick will do its duty.

But if the lawyers are going to get paid to play twister, they'll do so. I'm a recovered lawyer myself. The mantra of the species is "webillbythehour." Ommmmm.

Sadly, Dealbreaker, one of the two blogs that started the whole thing, the ones who first shouted out "right foot, red!" have agreed to a temporary injunction keeping this matter off of their site until a full hearing.

What are the big secrets in the brochure? Psst. Come closer. Solengo plans to create a series of "sector specific" funds in, among other things, base metals, crude oil, and UK natural gas.

That's it. Not really. But that's about as secret and proprietary as it gets. The great secret that Solengo and its lawyers are working so hard to protect is that their plans are quite common-place and jejune. They are working hard to protect an unearned air of secrecy.

Psssst. That Solengo Brochure

Lawyers keep working at hiding a certain brochure from you.

Let's talk about why.

Last year, a certain high-flying futures trader, Brian Hunter, lost $6 billion of other people's money (some of it pensioner's money) speculating on the future price of natural gas. Ah, well. That's how the capitalist cookie crumbles, right? Well ... right.

I'm not aware that any elderly pensioners have been thrown out of their garret apartments due to Mr. Hunter's loses. He worked for a hedge fund called Amaranth -- a Greek term for an unfading flower -- and in general the institutions that invested in Amaranth didn't generally fade out as a result, i.e. Amaranth was only a small portion of their portfolios, so no great harm was done.

One would think, though, that after losing $6 billion, Mr. Hunter's career as an asset manager would be somewhat cramped. He'd be well advised to try his hand at something else. I understand that the retailers of previously owned automobiles are always looking for new talent.

Instead, Hunter has created a new fund, which he calls Solengo. He's named this one for a wine.

Within the financial press, the story that Hunter was looking for new suc ... investors ... was naturally considered fascinating, so there was something of a competition to get a hold of a copy of the marketing brochure he's been using.

This proved to be not too difficult to do, because Solengo had been sending out its brochure as an unsecured Adobe Acrobat document through cyberspace. I can't say how widely, but widely enough so that a couple of alert bloggers got it and posted it.

That's when copyright lawyers entered the picture. Throughout Holy Week, a drama played itself out in which lawyers for the Solengo-retained firm of Kobre & Kim repeatedly sought to ... well, entomb this information. And somebody or other -- some invisible hand? -- kept rolling the rock to the side.

What Kobre (is the name pronounced like that of the snake?) is trying to do is fundamentally both wrong and futile. The copies of the brochure keep spreading. Here is one of them.

The angelfire blogger, who calls himself Publius,has explained his action here.

I tip my hat to Greg Newton, who's been covering developments on this story intensely.

General rule? Transparency, good. Political fixes to produce silence and preserve ignorance, bad.