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Another New York Hedgie Marriage Down The Drain

What’s up with Wall Street marriages lately?

It seems like no relationship is safe in the hedge fund world, with huge-dollar divorces being announced every few months now.

Bill Ackman and his wife Karen Ann Herskovitz recently called it quits after 25 years.

Billionaire Ken Griffin, the richest man in Illinois, went through a high profile divorce from his now-ex-wife Anne Dias-Griffin in 2015. And New Jersey’s richest man, and a big contributor to the state’s income tax base, became a resident of Florida after his 30-year-long marriage ended in 2014.

Now David Einhorn, the billionaire founder of Greenlight Capital, has separated from his wife of 24 years, Cheryl Strauss Einhorn, with a divorce in the works.

The couple married in 1993, and during their nearly quarter of a century together, David has amassed a fortune estimated at $1.55 billion.

Cheryl Strauss Einhorn is an award-winning financial reporter and media consultant, and has taught at Columbia Business School and Columbia University Graduate School of Journalism.

She is credited with naming David’s fund “Greenlight” when he first launched it back in 1996, and the couple has generally seemed quite happy, raising three children together and becoming celebrated philanthropists.

Both Einhorns were raised in affluence.

Cheryl’s parents are physicians, with her mother working as a pediatrician and also consulting in healthcare management. Her father pioneered techniques in nuclear medicine and worked for pharma giant Bristol-Myers Squibb in New Jersey, and lectured at Harvard Medical School on radiology topics.

David’s family runs a consulting firm called Einhorn & Associates, and a venture capital fund called Capital Midwest Fund. Raised in Wisconsin, David attended Cornell with Cheryl, where both graduated with honors.

They settled in New York and David shortly found work at an investment management firm, while Cheryl went to work in the financial press.

Within a few years, David appears to have had the confidence to chart his own course in finance, and was able to pull together $900,000 to start Greenlight Capital.

Half of that came from his parents, who no doubt consider it a very good investment to have made.

Greenlight’s early successes were largely attributed to David’s knack for identifying weak financial firms and then short selling them.

He hasn’t been shy about calling out corporations that he believes are being mismanaged or, even worse, breaking the law.

He’s made headlines over the years by picking very public battles with some of the biggest names around, including the now-infamous Lehman Brothers.

In a 2002 speech, he recommended that investors short a company called Allied Capital, prompting a 20% drop in the company’s stock the next day.

Later, it came out that Einhorn himself held a short on the company, prompting allegations from Allied that he was manipulating markets for personal gain.

Einhorn shot back that the company was defrauding the Small Business Association, and then things got especially strange.

Allied engaged in a scheme to illegally access Einhorn’s phone through a social engineering ruse, and it was nearly six years before the Securities and Exchange Commission found that Allied had indeed broken securities laws around accounting and illiquid assets.

Einhorn came to believe that the problems at Allied weren’t confined to it, but instead, the same sorts of questionable conduct, bad faith business practices, and self-interested philosophy had become widespread in the industry.

These beliefs led to one of Einhorn’s most consequential acts in his career.

In July 2007, he claimed that Lehman Brothers was using bad accounting practices for their financial reporting, and that the company had a much larger exposure to illiquid investments than outsiders realized.

He revealed in April 2008, after Bear Stearns had been bailed out, that he had shorted Lehman.

Einhorn’s intervention helped drop Lehman’s stock value, and the company reported its $2.8 billion quarterly loss soon after.

The company declared bankruptcy in September 2008.

He’s had other high profile fights, and has even faced scrutiny from overseas financial regulators.

In 2012, the United Kingdom’s Financial Services Authority fined Einhorn and Greenlight $11.2 million for insider trading.

While Einhorn denied knowing that the information he based a series of trades on was not yet public, the FSA determined that a man in his position should have known the status of the information, and that his conduct was inappropriate and damaging to the market.

Einhorn paid the fine rather than continue to fight the matter, making him the recipient of the second largest FSA fine ever levied on an individual.

Cheryl Einhorn’s career has been no less accomplished than her husband’s, though her words don’t shake markets quite the way his do.

She’s written for Barron’s, the New York Times, Foreign Policy, and Pro Publica, on topics related to business, the economy, and finance.

She’s also been an on-air guest on CNBC, and runs a consulting firm called CSE Consulting, where she works with individuals and companies to better articulate their messaging.

In 2002, the couple established the Einhorn Family Charitable Trust to support nonprofits that work to build a more empathetic and compassionate world.

David also sits on the boards for City Year, the Michael J. Fox Foundation for Parkinson’s Research, and is the chair of the Robin Hood Foundation’s board.

Aside from the substantial amount of money that will be involved in the divorce, the couple also own a 10,000-square-foot home in Rye, New York, whose disposition will have to be sorted.

High dollar divorces, especially in a very long marriage, often end up taking much longer to negotiate than divorces between more typical earners.

If one of these two wants to go live in a second residence, the additional rent payment won’t inconvenience them.

If temporary maintenance is assigned in a NY divorce, neither party will have a pocketbook reason to speed things along.

It remains to be seen whether this divorce will play out publicly or quietly, but what we do know is that a lot of hedge fund founders have found themselves single of late. Is there something in the water on Wall Street?

If your marriage in Brooklyn is ending, get the help you need to come through it in the best financial position possible.

We can explain how your finances will change during a divorce.

Call the attorneys at Zelenitz, Shapiro & D’Agostino today at 718-725-9601 for a free consultation with an experienced Brooklyn divorce lawyer.

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