Goldman agreed to support fund with Lars Windhorst ties
German financier in spotlight after lawsuit against US investment bank
Goldman Sachs agreed to act as prime broker to a fund linked to Lars Windhorst, the European financier in the spotlight after a whistleblower complaint against the US investment bank.
In a lawsuit filed in the US last week, Christopher Rollins, a managing director and 16-year Goldman veteran, claimed he was fired in 2017 as part of an effort to avoid a compliance scandal stemming from multiple trades connected to a “notorious European businessman”.
The suit referred to Goldman arranging the sale of a “large stake” in a listed company on behalf of the unnamed financier in July 2016. That month Mr Windhorst’s investment firm, Sapinda, sold a more than €400m stake in Austrian property group Buwog through the US bank.
Mr Rollins was fired from Goldman after several trades linked to Mr Windhorst failed to settle in August 2016, leaving the bank facing an $85m exposure. But the former Goldman banker alleges in his suit that other senior executives had previously steered a series of transactions related to the financier past the bank’s risk controls.
Documents seen by the Financial Times show that, a year before Mr Rollins’s disputed trades, Goldman signed on as a prime broker to a new fund that a firm that Mr Windhorst was a client of was trying to launch.
Prime brokers offer securities lending, cash management, trading and other services to hedge funds.
London-based Shard Capital Partners LLP was in 2015 looking to raise money for a new series of Luxembourg funds called Shard Capital Funds. While the efforts were ultimately unsuccessful, company filings in Luxembourg show that the US investment bank agreed to act as prime broker to these funds in September 2015. Marketing documents for Shard Capital Funds seen by the FT also refer to Goldman as its “London prime broker”.
Mr Windhorst denies he was the businessman referenced in the complaint from Mr Rollins. An exhibit to the suit is a letter from Mr Rollins to Goldman executives, referring to a 2015 article in the Financial Times profiling the German financier.
A well-known entrepreneur in his native Germany, Mr Windhorst suffered a personal bankruptcy, oversaw several company insolvencies and received a suspended jail sentence in 2009 but then reformed his businesses around holding company Sapinda.
Shard Capital has provided services to several businesses linked to Sapinda group. Deloitte last year claimed that Shard Capital Partners supplied confirmation letters that included “deliberately false” information in its role as custodian to Sapinda Invest, a special purpose vehicle created to invest in Mr Windhorst’s portfolio companies. Shard Capital last year “categorically” denied the audit firm’s allegations, saying they gave answers to Deloitte in good faith and believed them to be true.
When Goldman signed on as prime broker to Shard Capital Partners, Mr Windhorst was in talks to seed the new Luxembourg funds, according to people with knowledge of the matter. The fund’s annual report published in August 2015 said that “a seed investor is standing by with $30 million in specie seed capital”, although it did not specify who this investor was.
However, its next annual report from September 2016 said that by the time the fund was ready to launch “alas, our original seed investor had moved on”.
The statement added that the seed investor might still invest “through one of his portfolios” to launch a “Special Opportunities Fund”. The marketing documents seen by the FT said this Special Opportunities Fund would invest in “high yield illiquid bonds and stocks that are usually asset or story backed”.
A spokesman for Shard Capital said it does not comment on “speculation regarding clients or investors”. A spokesman for Mr Windhorst said he was not the seed investor referred to in the annual reports, nor was he involved in the launch of a Special Opportunities Fund. Goldman Sachs declined to comment.
Shard Capital also helped carry out several sale and repurchase agreements of illiquid bonds on behalf of Mr Windhorst and his Sapinda group, according to multiple traders and fund managers. The German financier has had to fend off lawsuits in recent years due to his failure to settle several such agreements to repurchase bonds.
A spokesman for Shard Capital said the firm “at no time provides input on its custodial clients’ investment or trading strategies”.