Elliott Investment Management, SMBC and Macquarie Group Ltd. are exposed to Market Financial Solutions Ltd., adding to the list of Wall Street firms caught up in its collapse.
Elliott holds about £200 million ($268 million) of mortgage-backed facilities tied to the failed lender while Sumitomo Mitsui Banking Corp. has about £100 million of exposure, people familiar with the matter said. Macquarie's global markets unit is among the investors in MFS with an exposure of less than £50 million, another person familiar said.
US hedge fund Elliott bought the securities at par from UK-based digital lender Chetwood Bank, the people said. It is pursuing all avenues for recovery, another of the people said, adding the securities were originated by other lenders.
Elliott is the ultimate controlling shareholder of Chetwood, the bank's accounts show.
Spokespeople for Elliott, SMBC and Macquarie declined to comment. A representative for Chetwood didn't respond to a request for comment. The FT reported Elliott's exposure earlier.
MFS collapsed into administration last week amid serious allegations of fraud, including the alleged double-pledging of assets. Some creditors have warned there could be a £930 million shortfall in the collateral backing their loans.
The saga follows the blowups of US auto parts supplier First Brands Group and subprime lender Tricolor Holdings, adding to mounting questions about underwriting standards and risk controls in credit markets.
Lenders including Barclays Plc, Apollo Global Management Inc.'s Atlas SP Partners unit and Jefferies Financial Group Inc. helped arrange more than £2 billion of loans to the firm, Bloomberg News reported last week.
