A dozen alert “06880” readers have emailed me links to the same Wall Street Journal story.
Titled “Young Financier’s Insurance Empire Collapses,” it begins:
Alexander Chatfield Burns cut a dashing figure in young New York financial circles.
Still in his mid-20s, he controlled a private-equity firm that owned several insurance companies. He called late-night meetings at a penthouse cigar club and donated the wine for a Guggenheim museum event from a vineyard he later bought.
Then one day about a year ago, Mr. Burns checked into a mental-health ward at New York’s Bellevue Hospital, leaving behind an affidavit describing an unusual series of asset transfers. Soon after, he resigned from his company, Southport Lane Management LLC.
Now, insurance investigators are sifting through the rubble. Delaware regulators say Southport under Mr. Burns siphoned off millions of dollars of mainstream insurance holdings, replacing them with assets that were “illiquid, grossly over-valued or hard to value, worthless, and in some cases non-existent,” as the state’s insurance commissioner put it in a filing in Delaware Chancery Court….
The story continues that Burns — now 28 years old — “amassed a business including two U.S. insurance companies, two offshore reinsurers, a brokerage firm and a web of dealings with other insurers that left him in charge of investing hundreds of millions of dollars in additional assets.”
Regulators seized control of the two main insurance companies last April. One in Delaware now is being liquidated, while one in Louisiana has been sold. Insurance-company losses total nearly $250 million, based on write-downs taken, while insurers still hold tens of millions of dollars in other questionable assets, according to insurance regulatory filings and court documents.
The “06880” hook is that, according to the story, Burns grew up in Westport as “a financial prodigy.”
When he was about 13, his mother told Robert N. Gordon, a friend and head of Twenty-First Securities Corp., that her son had determined that a famed options-pricing model “was wrong” and “he had a better idea,” Mr. Gordon recalls. The model, called Black-Scholes, had won its authors a Nobel Prize. Mr. Burns’s mother, a former Citigroup Inc. executive, declined to comment.
Very interesting. What’s even more interesting is that none of the people who emailed me the WSJ story has ever heard of “Alexander Chatfield Burns.”
The article adds that Burns “attended Yale and often wore Yale apparel, and he traced his Chatfield ancestry to the Mayflower, according to former associates.” However, Yale has no record that he went there.
And Twenty-First Securities — where Burns’ resume said he “began his career” — says he was never an employee. (He may have hung around the trading room as “when he was a kid.”)
Perhaps Alexander Chatfield Burns is making up his Westport pedigree too?