By Brendan Pierson (Reuters) -From nasdaq

A U.S. judge has appointed a new receiver
to oversee the unwinding of assets held by hedge fund firm
Platinum Partners, after the first receiver resigned over
disagreements with federal securities regulators.

In a written order on Thursday, U.S. District Judge Dora
Irizarry in Brooklyn accepted the resignation of Bart Schwartz,
chairman of professional monitoring firm Guidepost Solutions
LLC. Schwartz had been appointed receiver after prosecutors in
December accused Platinum leaders of running a more than $1
billion fraud. The six men have pleaded not guilty.

At the suggestion of the U.S. Securities and Exchange
Commission, Irizarry appointed former bankruptcy judge Melanie
Cyganowski, now head of law firm Otterbourg’s bankruptcy group,
as Schwartz’s replacement. The agency is pursuing civil claims
against the Platinum leaders.

However, Irizarry stopped short of approving changes the SEC
proposed to the court order describing the receiver’s duties,
saying she would rule on that later. Some Platinum investors
have criticized the changes as an attempt by the SEC to exercise
control over the receiver, which they say could harm the value
of their investments.

Schwartz asked to resign in a June 23 letter. He said he
believed investors would benefit from sinking more capital into
some of Platinum’s investments to increase their value, while
the SEC favored a quick liquidation.

The SEC’s new proposed order on the receiver’s role removes
language about realizing Platinum assets’ “true and proper
value,” while adding more language about an “orderly
liquidation.”

In a June 30 letter to the court, a group of Platinum
investors said the new proposed order “handcuffs” the receiver.
The investors said they believed they stood to gain more than
$100 million from Schwartz’s plan to make additional
investments, calling his early removal a “nightmare scenario.”
The SEC had called for Schwartz to be removed because he
once did work for an unnamed law firm that is now a debtor to
the Platinum estate. But in his letter, Schwartz said that did
not present any conflict of interest.

Platinum was the subject of a Reuters investigation
published in April 2016 that highlighted its many complicated
and illiquid investments in controversial companies.
(reut.rs/2sJ4OPU)

Platinum’s largest group of funds, Platinum Partners Value
Arbitrage, is being wound down under the supervision of a Cayman
Islands-based liquidator. Platinum represented the gross value
of its funds to be $1.7 billion at the time of the criminal
charges.

(Reporting by Brendan Pierson in New York)

For more on this story go to: http://www.nasdaq.com/article/platinum-partners-receiver-replaced-after-clashing-with-us-regulators-20170707-00790