Wikipedia

Charles J. Gradante

Charles J. Gradante (born July 30, 1945) is an Italian-American businessman in the hedge fund industry, appearing on television and before the United States Congress in that role.[1][2][3] Sovereign Wealth Fund Institute's PensionDaily.com called Gradante "one of Wall Street's most sought after opinion leaders" for financial and economic areas.[1] Gradante is known as one of the first hedge fund industry executives to spark a legendary debate about the risk of hedge funds growing too large rather than focusing on finding investments where they have a competitive edge; he most recently discussed the issue at a conference hosted by The Palm Beach Hedge Fund Association that was covered by Yahoo Finance and CorpGov.[4]

Charles J. Gradante
Born (1945-07-30) July 30, 1945 (age 79)
New York, New York
EducationLIU C.W. Post, MS in Management, BS in Engineering
OccupationHedge Fund Co-Founder
EmployerHennessee Hedge Fund LLC
Known forHedge Fund Pioneer
SpouseElizabeth "Lee" Hennessee-Gradante
Charles Gradante - Financial Times

Early life and education

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Gradante was born on July 30, 1945, to Sebastian "Buster" Gradante and Emmauela "Mildred" née Prestigiacomo in the Greenwich Village section of New York City. His father was the founder and CEO of the RCB Transportation Company in New York.[5] Charles graduated from Lindenhurst Senior High School in 1963 with All County and All League honors in football. Gradante received an athletic scholarship for football and baseball at LIU-C.W. Post and played 4 years of varsity baseball. Afterwards, Gradante graduated from LIU C.W. Post where he earned a B.S. in engineering sciences in 1967 and a M.S. in management engineering in 1970.[6] Gradante first became employed by Grumman Aeronautical Engineering Corp. in Bethpage, NY, where he joined a group of engineers building the first lunar landing module. He would then join Pan American World Airways Space Shuttle Design Team.[3]

Business career

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In 1971, Gradante pivoted away from engineering and into the financial services industry by joining John Diebold Venture Capital Corporation to advise IBM Corporation on acquisitions in the computer industry.[7] Gradante moved on to Citibank from 1976 to 1986, where he rose to the rank of vice president.[8] In 1986, Gradante left Citibank and became the assistant to the chairman of Drexel Burnham Lambert Ltd. in London, responsible for trading and sales. On October 10, 1990, Gradante became president and CEO of failing Union Chelsea National Bank where he engineered a turnaround and remained until 1995.[3]

Hennessee Group LLC

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In 1995, Gradante became the co-director at the Hennessee Hedge Fund Advisory Group which was formed by Elizabeth “Lee” Hennessee-Gradante as a division of E. F. Hutton in 1987. In 1995, with a team of four people and $200 million in assets under advisory, Gradante negotiated the acquisition of Hennessee Hedge Fund Advisory Group by Weiss, Peck & Greer. Since its start in 1987, the Hennessee Hedge Fund Advisory Group provided hedge fund investment research as well as hedge fund performance indexes that have been cited by institutions, hedge fund managers and investors. Additionally, the group published the Hennessee Hedge Fund Review since 1993, which provided monthly outlooks into hedge fund performance and the markets.[9]

In 1997, Gradante and his wife, Elizabeth “Lee” Hennessee-Gradante, took the firm private and co-founded the Hennessee Group LLC. At its peak, this long-short equity hedge fund managed more than $1.6 billion of assets.[10] In December 2012, Hennessee Group LLC sold its hedge fund division to Terrapin Asset Management.[11] However, the group maintained ownership of the Hennessee Hedge Fund Indexes as well as other research services. In 2007, Gradante predicted the looming CDS-CDO home mortgage crisis.[12][13] The group's research has been frequently quoted in The Wall Street Journal, Barron’s, The New York Times, Forbes, and The Financial Times.[14]

Bayou Hedge Fund Fraud

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In July 2005, the Bayou hedge fund fraud unraveled and was reported to the Securities and Exchange Commission.[15] One such client, South Cherry LLC, sued the Hennessee Group alleging that the Bayou fraud could have been and should have been discovered by Hennessee's due diligence process.[16] The lawsuit against Hennessee Group and Gradante was subsequently dismissed in July 2007 by U.S. District Court Judge Colleen McMahon who wrote: "that since Bayou's principals had deceived the entire investment community for over nine years, it was doubtful that Hennessee's due diligence would have uncovered the fraud".[17][18] The dismissal was upheld on appeal in July 2009.

In the aftermath of the Bernard Madoff hedge fund fraud in December 2008, the Bayou fraud was revisited by the Securities and Exchange Commission and Hennessee Group LLC and Charles Gradante settled similar charges of alleged due diligence failures. Neither Hennessee group LLC nor Gradante admitted any wrongdoing in April 2009.[19]

SandDollar Capital

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In 2007, Gradante and his wife co-founded SandDollar Capital LLC, a private equity firm. On July 31, 2007, SandDollar Capital LLC formed an alliance with Barbarian Films LLC.[20][21] Some of the films created through this alliance include 13, Spread, The Greatest, and Powder Blue.[22][23]

1998 Long-Term Capital Management Downturn

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In 1998, Charles Gradante was invited by the House of Representatives to explain the collapse of the Long-Term Capital Management hedge fund.[24] In his testimony. Gradante received notoriety in pointing out that "hedging is not inherently bad for markets; the farmer was the first hedger and as such hedge funds use similar strategies". He further pointed out that after the Russian economic crisis of 1998, LTCM developed a flawed, fat-tail risk strategy. Secondly, banks and brokers lent too much capital to LTCM without properly conducting due diligence.[25] Gradante believes that the New York Federal Reserve Bank acted swiftly and brilliantly in avoiding potential systemic risks. He points out that merger arbitrage was negatively affected by LTCM as spreads narrowed and then widened.[26] After the LTCM downturn, Gradante lobbied for increased transparency in the hedge fund industry on national television and in front of Congress.[27] Gradante also advocated for a shorter settlement period, which ultimately came into effect with the adoption of "T+1" settlement in 2024.

GameStop Debacle

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In the wake of the GameStop short squeeze of 2021, Gradante spoke at a CorpGov event in Palm Beach where he discussed the standoff between retail investors and hedge funds and the resulting strain put on Robinhood, other large broker dealers and market makers.[28] He appeared at subsequent events with The Palm Beach Hedge Fund Association to discuss inappropriate hedge fund risk management, excessive use of naked shorts and synthetic shorts, the need for regulatory changes with respect to borrowing costs and margin requirements on heavily-shorted stocks. Gradante's videos on the GameStop debacle, where he sided with retail investors, were viewed globally hundreds of thousands of times across various platforms.[29][30]

Advisory role

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Gradante is one of Wall Street's most sought-after experts on matters of the stock market, the global economy, hedge fund strategy, and asset allocation.[31][32][33] He has testified before the United States House of Representatives as a hedge fund industry expert discussing the systemic risk in the wake of long-term capital management.[34][35][36] He also participated in a U.S. Securities and Exchange Commission Roundtable on hedge funds and a CFTC Roundtable on CPO and Commodity Pool Industry Issues.[37][38][39][40] Furthermore, the Senate Banking Committee also sought Gradante's opinion on the issue of hedge fund regulations, the role of hedge funds in providing liquidity to markets, and potential systemic risks associated with hedge funds.[41][42] Gradante was one of the few investment advisors to predict the stock market crash of 2008–2009.[43][44]

Gradante has co-hosted and made guest appearances on Bloomberg Television,[45] Fox News,[46] CNN Financial News[47] and CNBC's Squawk Box[48] and Street Signs.[49][50][51]

Gradante contributed to the book, Expert Financial Planning: Investment Strategies from Industry Leaders and Investors Guide to Hedge Funds.[52][53]

From 2002 to 2005, Gradante was a member of the board of trustees of Regent University.[40][54]

In 2009, Gradante pioneered new ways to monitor the hedge fund systematic risk to the capital markets and hedge fund fraud surveillance, especially the "Gradante Gatekeeper Control Concept".[55][56]

Awards and honors

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On May 8, 2005, Gradante was honored with the Distinguished Alumni Award from the C.W. Post Campus of Long Island University.[3]

On May 26, 2015, Gradante was inducted into the Lindenhurst Senior High School Hall of Fame.[57]

Personal life

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Gradante met Elizabeth Lee Hennessee in December, 1991, and they married on October 31, 1992, at the St. Bartholomew's Episcopal Church in New York. Gradante has three children and two grandchildren. He currently resides in Florida and New York.[5][58] His wife passed away on October 29, 2016.[59] Since 1992, Gradante has acted as trustee to the DP Foundation, a 501c3 nonprofit, while also serving on the boards of the Palm Beach Hedge Fund Association and CorpGov. Gradante is a published poet and amateur abstract artist.[60][61] He is a patron of The Palm Beach Opera, The Palm Beach Symphony, The Norton Museum, Palm Beach Jazz, and Arts Garage.[62]

References

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  1. ^ a b http://www.pensiondaily.com/7-13-05-charles-gradante-on-bloomberg-tv-market-movers-with-monica-bertran-discussing-hedge-funds/ , Internet Archive link
  2. ^ Owen, James P. (16 May 2001). The Prudent Investor's Guide to Hedge Funds: Profiting from Uncertainty and Volatility. John Wiley & Sons. p. 155. ISBN 9780471436737.
  3. ^ a b c d "Public Relations | Press Releases". www2.liu.edu. Archived from the original on 2008-12-01. Retrieved 2016-08-23.
  4. ^ Jannarone, John (2019-05-28). "Wall Street Veteran Charles Gradante: Hedge Funds Would Be Smart to Be Smaller". finance.yahoo.com. Retrieved 2020-05-20.
  5. ^ a b "WEDDINGS; Lee Hennessee, Charles Gradante". The New York Times. 1992-11-01. ISSN 0362-4331. Retrieved 2016-08-23.
  6. ^ ""Public Relations | Press Releases"". Archived from the original on 2008-12-01.
  7. ^ Bayot, Jennifer (2005-12-27). "John Diebold, 79, a Visionary of the Computer Age, Dies". The New York Times. ISSN 0362-4331. Retrieved 2016-08-23.
  8. ^ http://www.hennesseegroup.com/information/info/Charles%20Gradante%20to%20Receive%20Distinguished%20Alumni%20Award%20from%20C.W.%20Post.pdf [bare URL PDF]
  9. ^ "Hennessee Hedge Fund Review - A Monthly Hedge Fund Publication". www.hennesseegroup.com. Retrieved 2016-08-23.
  10. ^ "E. Lee Hennessee, Early Woman in Hedge Fund Role, Dies at 64". Bloomberg.com. November 2016.
  11. ^ LLC, Terrapin Asset Management, LLC; Hennessee Group. "Terrapin Asset Management LLC Announces Acquisition of Hennessee Group's Hedge Fund Advisory Business". www.prnewswire.com (Press release). Retrieved 2016-08-23.{{cite press release}}: CS1 maint: multiple names: authors list (link)
  12. ^ "The Big Picture". bigpicture.typepad.com. Retrieved 2016-08-23.
  13. ^ Archived at Ghostarchive and the Wayback Machine: 11-2-06 Charles Gradante on CNBC's Street Signs W/ Host Erin Burnett Discussing Hedge Funds. YouTube.
  14. ^ "Hennessee Group LLC - Management and Biographies". www.hennesseegroup.com. Retrieved 2016-08-23.
  15. ^ "Bayou Hedge Fund Litigation" (PDF).
  16. ^ "ADVISER CLEARED IN FRAUD". New York Post. 2007-08-09. Retrieved 2018-07-16.
  17. ^ "Hennessee Lawsuit Dismissal Upheld | FINalternatives". www.finalternatives.com. Archived from the original on 2018-07-16. Retrieved 2018-07-16.
  18. ^ Hagerty, James R. (2016-11-04). "Lee Hennessee Helped Lift the Veil of Secrecy at Hedge Funds". The Wall Street Journal. ISSN 0099-9660. Retrieved 2018-07-16.
  19. ^ "Bernard Madoff Fraud Litigation" (PDF).
  20. ^ "Barbarian Hedge Fund Forms Alliance With Sand Dollar Capital | Hedge Fund News From HedgeCo.Net". www.hedgeco.net. Retrieved 2016-08-23.
  21. ^ Kaufman, Anthony (2007-09-08). "Investors get sweet on niche treats". Retrieved 2016-08-23.
  22. ^ "Hennessee Group Vets Team With Film Fund | FINalternatives". www.finalternatives.com. Archived from the original on 2016-08-26. Retrieved 2016-08-23.
  23. ^ "Barbarian Films, LLC, Film Financier". Archived from the original on 2017-02-03. Retrieved 2017-01-29.
  24. ^ "Hedge Fund Operations". House of Representatives. 1998-10-01. Retrieved 2020-05-20.
  25. ^ "The Epic Story Of How A 'Genius' Hedge Fund Almost Caused A Global Financial Meltdown". Business Insider. Retrieved 2017-02-05.
  26. ^ HedgeFundVideos (2012-07-11), 12 Hennessee Group's, Charles Gradante, on CNNfn "Street Sweep" w/Terry Keenan on Hedge Funds, retrieved 2017-02-05
  27. ^ "Hedge Fund Operations". commdocs.house.gov. Retrieved 2017-02-05.
  28. ^ Jannarone, John (March 23, 2021). "ran Investor Charles Gradante: GameStop Revealed T+2 Settlement Issues, Poor Risk Management, Solvency Fears". CorpGov. p. 1. Retrieved February 21, 2022.
  29. ^ Jannarone, John (January 6, 2022). "Wall Street Veteran Charles Gradante Offers Rare Explanation of Option-Driven Stock Moves". Yahoo Finance. p. 1. Retrieved February 21, 2022.
  30. ^ Alan, Hatfield (February 2, 2022). "4-Part Video: Hedge Fund Veteran Charles Gradante Jan. 31 Discussion of Naked Shorts and Squeezes". CorpGov. p. 1. Retrieved February 21, 2022.
  31. ^ HedgeFundVideos (2009-02-15), 7-13-05 Charles Gradante on Bloomberg TV Market Movers with Monica Bertran Discussing Hedge Funds, retrieved 2016-08-23
  32. ^ "Hennessee pushes for changes in the regulation of hedge funds". www.investmentnews.com. 3 May 2009. Retrieved 2016-08-23.
  33. ^ "Gradante Renews Calls to Outsource Hedge Fund Audits". Retrieved 2017-02-05.
  34. ^ http://www.hennesseegroup.com/information/info/TESTIMONY%20OF%20CHARLES%20GRADANTE%20OCTOBER%201998.pdf [bare URL PDF]
  35. ^ HedgeFundVideos (2012-07-11), 13 Hennessee Group's Charles Gradante's C-SPAN House Testimony on Hedge Funds and LTCM, retrieved 2016-08-23
  36. ^ "Hedge Fund Operations".
  37. ^ http://www.hennesseegroup.com/information/info/Hennessee%20Group%20SEC%20Submission%20White%20Paper.pdf [bare URL PDF]
  38. ^ http://www.hennesseegroup.com/information/info/HENNESSEE%20SUBMISSION%20TO%20CFTC%204-6-05.pdf [bare URL PDF]
  39. ^ https://www.sec.gov/spotlight/hedgefunds/hedge-gradante.pdf [bare URL PDF]
  40. ^ a b "Archived copy" (PDF). Archived from the original (PDF) on 2016-03-01. Retrieved 2016-06-03.{{cite web}}: CS1 maint: archived copy as title (link)
  41. ^ http://www.hennesseegroup.com/information/info/HENNESSEE%20SUBMISSION%20TO%20BANKING%20COMMITTEE%20with%20CG%20verbal%20testimony-7-15-04.pdf [bare URL PDF]
  42. ^ "Archived copy" (PDF). Archived from the original (PDF) on 2016-12-24. Retrieved 2017-01-29.{{cite web}}: CS1 maint: archived copy as title (link)
  43. ^ "The Big Picture". bigpicture.typepad.com. Retrieved 2017-01-29.
  44. ^ HedgeFundVideos (2008-10-04), 11-2-06 Charles Gradante on CNBC's Street Signs W/ Host Erin Burnett Discussing Hedge Funds, retrieved 2017-01-29
  45. ^ HedgeFundVideos (2009-07-23), 5-13-05 Bloomberg TV - Host Matt Nesto Features Charles Gradante Discussing the Impact of CDSs, retrieved 2016-08-23
  46. ^ HedgeFundVideos (2008-10-07), 7-28-05 Charles Gradante w-Neil Cavuto on Fox News Discussing Hedge Fund Trading, retrieved 2016-08-23
  47. ^ HedgeFundVideos (2009-07-22), 8-27-02 CNN Host Ali Velshi w/ Hennessee Group's Charles Gradante Answering: What is a Hedge Fund?, retrieved 2016-08-23
  48. ^ HedgeFundVideos (2012-07-11), 5 Charles Gradante and E. Lee Hennessee CNBC "Sqwawk Box" w/Mark Haines - What are hedge funds?, retrieved 2016-08-23
  49. ^ HedgeFundVideos (2008-10-05), 9-18-06 Charles Gradante on CNBC's Closing Bell w/ Maria Bartiromo Discussing Hedge Fund Trading, retrieved 2016-08-23
  50. ^ HedgeFundVideos (2008-10-04), 11-2-06 Charles Gradante on CNBC's Street Signs W/ Host Erin Burnett Discussing Hedge Funds, retrieved 2016-08-23
  51. ^ "Hennessee Group LLC - TV Interviews". www.hennesseegroup.com. Retrieved 2017-01-29.
  52. ^ Arffa, Robert C. Expert Financial Planning: Investment Strategies from Industry Leaders. N.p.: n.p., n.d. Print.
  53. ^ "Hennessee Group Online". www.hennesseegroup.com. Retrieved 2016-08-23.
  54. ^ Owens, James (December 4, 2000). The Prudent Investors Guide to Hedge Funds (1st ed.). Wiley.{{cite book}}: CS1 maint: date and year (link)
  55. ^ "Gradante Renews Calls to Outsource Hedge Fund Audits | ThinkAdvisor". ThinkAdvisor. Retrieved 2018-07-16.
  56. ^ "CanadianHedgeWatch - General News". www.canadianhedgewatch.com. Retrieved 2018-07-16.
  57. ^ "Lindenhurst Holds Athletic Awards Ceremony". 29 June 2013. Retrieved 2016-08-23.
  58. ^ Whitaker, Barbara (1998-05-31). "Habitats/45 Sutton Place South; Penthouse With a Terrace Beats a Weekend Home". The New York Times. ISSN 0362-4331. Retrieved 2016-08-23.
  59. ^ "E. Lee Hennessee-Gradante, active in Palm Beach charities, dies". Archived from the original on 2016-11-05. Retrieved 2016-12-10.
  60. ^ Watt, Kevin (June 2023). "Cracks in the Ice".
  61. ^ Watt, Kevin (May 2024). "Fractured Light".
  62. ^ "Home". Arts Garage. Retrieved 2024-06-08.
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