"Stand Down!" - How One Navy Seal Killed A Multi-Billion Hedge Fund

It has now been revealed that the fall of Dan Kamensky’s Marble Ridge Capital was at the hands of a former Navy SEAL, turned trader.

Joe Femenia, the head of distressed-debt trading at Jefferies Financial Group, is the man who was outlined in court filings as having taped conversations that brought the hedge fund down, according to Bloomberg. The fund fell after Kamensky urged Femenia to not submit a bid for part of bankrupt retailer Neiman Marcus.

Jefferies and Marble Ridge had been involved in a standoff regarding Neiman Marcus, as they both sought to bid for a portion of the company's online business, MyTheresa. 

Femenia sounded the alarm on the dubious tactic and raised the issue with a U.S. trustee. Highlighting the issue forced Kamensky to acknowledge he had committed a "grave mistake" and forced him to ultimately shut down his fund. 

Legal filings show Kamensky telling Femenia to "Stand DOWN". Probably not a bright thing to say to a Navy SEAL...

Photo: Bloomberg

They continued with Kamensky telling Femenia: “DO NOT SEND IN A BID.” This was followed by a "confrontational" phone call between the two, according to court filings. 

Femenia took the altercation to Jefferies' general counsel, who then disclosed it to an official creditor committee that was supervising the sale. Kamensky then urged Femenia, on a second phone call, to "treat the conversation off the books". He also urged Femenia to "change his recollection" of how their first call went but, by then, Femenia was recording the call. 

Kamensky pleaded: “[I]f you’re going to continue to tell them what you just told me, I’m going to jail, OK? Because they’re going to say that I abused my position as a fiduciary, which I probably did, right? Maybe I should go to jail. But I’m asking you not to put me in jail.”

Veteran trader Eric Rosen said: “I have known Joe and always found him to be an honest, upstanding guy and a straight shooter. He risked his life for our country and he seems to have done the honorable thing here.”

Femenia's track record includes graduating from the U.S. Naval Academy before being a SEAL and spending "much of his 20s" fighting in Afghanistan and Iraq. He previously worked at the elite trading group at Goldman Sachs before moving to Jefferies in 2016, where he worked as the head of