What Do Michael Milken And Silver Rock's New Fund Have In Common?

Executives formerly managing Michael Milken’s money at his family office, Silver Rock Financial LLC, have decided to start a hedge fund, the Wall Street Journal reported, mentioning securities filings and people familiar with the issue.

Milken, a famed junk-bonds trader at Drexel Burnham Lambert Inc. in the 1980s who pled guilty to securities fraud in 1990, has been barred from brokerage and financial advisory activities. However, the investor will seed the new hedge fund with several hundred million dollars, but will not be involved in the investment activities.

“Mike has never had any interest in being in the money management business and has no interest in being in that business now or ever,” a spokesman for Milken told Wall Street Journal. However, another source assured Milken is “not a passive client.”

The rest of the money will come from outside investors, which are already being courted, sources said.

What Milken brings to the hedge fund is not only money. The investor provides “something of a seal of approval as it gets off the ground,” WSJ read.