Ponzi Schemes, Vice Presidents and Free Information

I read, among many other things, the blog of an Australian money manager named John Hempton.  His company is Bronte Capital.  As a non-American he has a different perspective that I find interesting.

Anyway, earlier this week Hempton posted a story about a hedge fund called Ponta Negra that he suspected was really a fraudulent Ponzi scheme.  One person involved has now had his assets frozen at the request of the SEC.  The other details are complicated and you can read about them on Hempton’s blog.  One angle is particularly interesting.

Ponta Negra operates out of the New York offices of a company called Paradigm Global Advisors.  The owners of Paradigm are named Hunter Biden and James Biden.  They are, respectively, the son and brother of the Vice President of the United States, Joe Biden.

Why is this not in the headlines, you might ask?  I wondered the same thing.  On Tuesday morning I added Hempton’s initial post to the “What We’re Reading” list on the Invest With An Edge home page.  Out of curiosity, I also did a Google search for “Ponta Negra Biden.”  The only relevant hit was the one from Hempton.  You would think the news media would be all over a story like this.  Wrong.

On Wednesday Politico picked it up, and now word is out on Reuters and Financial Times – though in both cases only from internal bloggers and not on the main news wires, as far as I can tell.  Still, the cat is out of the bag.  Look for more headlines soon.  (If you run the same Google search I did on Tuesday you will see more stories now.)

Whether this will blow up into a major scandal is unclear; there’s no suggestion that the Vice President himself was involved.  I still think it is fascinating that an unknown blogger on the other side of the world can unearth such a thing.  So does the Columbia Journalism Review.

We live in the Information Age, and information wants to be free.  No one has a monopoly on it any more.  There was a time when the politically well-connected could do whatever they pleased with no worries anyone would discover it.  That time is gone.