Robert Schmidt -- Bloomberg
Aug. 24, 2006 -- The U.S. Treasury official leading a government inquiry into the hedge-fund industry is owed up to $2.5 million in payments keyed in part to hedge-fund investments.
The official, Emil Henry Jr., has a severance agreement with his former firm, Gleacher Partners LLC, that entitles him to 20 percent of the 2006 profits of an asset management unit specializing in hedge-fund investments, according to his federal financial disclosure form.
The arrangement has been cleared by ethics specialists and Henry has disqualified himself from making policy decisions on hedge funds until the Gleacher payouts are completed, said Treasury spokeswoman Jennifer Zuccarelli. Still, some securities and ethics attorneys said the severance deal poses at least an appearance of a conflict of interest, especially because the Treasury hedge-fund review is closed to the public.
``The clean breach is the best breach,'' said James Cox, a securities professor at Duke University Law School. ``Anything else, you're walking a pretty fine line subject to speculation and condemnation.''
Henry became assistant secretary for financial institutions at the Treasury Department in October after leaving Gleacher, a New York-based investment banking boutique.
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