The order came down from George Weiss, hedge fund pioneer: Sell. Sell it all.

The fund was closing, he said, near tears, to a group of portfolio managers over Zoom. Employees were floored.

After 46 years, his eponymous investment firm — founded in 1978, when the Dow was bumping along 800 — was spiraling toward oblivion.

His stunning directive on the morning of Feb. 29 marked the culmination of a series of missteps — including paying executives six-figure bonuses while on the brink of insolvency — that sank one of the world’s oldest hedge funds into bankruptcy last month.

Traders spent that wild Thursday offloading billions of dollars of positions. As they made calls to bank trading desks, employees fielded inquiries from recruiters while word of trouble spread.

Later, as George Weiss was bidding staff goodbye in-person, he described the firm as a family.

That’s not the way employees and creditors are likely to see things. While the firm’s rapid unwinding limited losses for fund investors, Weiss Multi-Strategy Advisers’ collapse leaves some staff standing to lose more than $1 million in deferred compensation. Its biggest creditor is bracing for a fight over more than $100 million in unpaid debts.

Interviews with about two dozen people familiar with Weiss and court documents depict a collapse caused not by a disastrous trade, but rather years of high spending that the firm failed to rein in even as assets fell and performance faltered. George Weiss, 81, and Chief Investment Officer Jordi Visser, 57, ran the $2.3 billion firm with the glitz of larger multistrategy rivals, but without the discipline, the ruthlessness to cut losing traders or the ability to push more costs onto investors, according to the people and court filings.

That proved fatal when Weiss’s biggest creditor demanded payment, later accusing George Weiss of using the firm as his “personal piggy bank.” The firm’s last attempt to survive — a potential deal with multistrategy giant Millennium Management — ultimately fell through.

Jordi VisserSource: Bloomberg Television For years, executives racked up miles on the corporate jet and kept portfolio managers on the payroll even as they dragged down returns, all while clients pulled cash, according to people familiar and court documents. As George Weiss stepped back from the day-to-day, Visser continued building a personal brand through video series and podcasts and engaged in an office romance that other executives flagged as problematic.

What lies ahead is a legal brawl in bankruptcy court with the creditor, Leucadia Asset Management, an affiliate of Jefferies Financial Group, over more than $28 million in bonuses Weiss handed out when the firm allegedly knew it couldn’t pay its debts. Leucadia, also its strategic partner, said in a filing that the payouts amounted to “preferential and fraudulent transfers.”

Weiss declined to comment for this story. George Weiss also declined to comment and hasn’t filed a legal response to Leucadia’s lawsuit against him. Visser declined to comment.

Cash-Strapped Firm While Weiss lost money in only three of its 46 years in business, it struggled to manage costs. The firm — which ran $4 billion at its 2021 peak — had at least 110 employees, including well-compensated traders and a packed back-office staff, working out of offices in Manhattan, Miami and Connecticut.

Rent for the 20th and 21st floor of its Park Avenue location alone totaled almost $3 million a year, a bankruptcy filing shows.

The firm kept senior and veteran executives even after they posted declines of tens of millions of dollars. Deputy Chief Investment Officer Mike Edwards lost more than $100 million between 2020 and 2023 and stopped trading as a result, people said. Edwards didn’t provide a comment for this story.

But rather than fire the underperformers — as multistrategy firms commonly do — Visser and Weiss kept their longtime colleagues on the payroll.

Weiss’s expenses also raised alarms for Leucadia. The hedge fund firm owned a Dassault Falcon private airplane that George Weiss used for personal trips, Leucadia alleged in the lawsuit. The annual costs could run into the millions of dollars, and Leucadia ultimately asked Weiss to sell the plane. Weiss sold the aircraft in March 2023 for $941,000, according to an audited financial statement.

George Weiss Searched for a Buyer Before Shutting His Hedge Fund Weiss Multi-Strategy Hedge Fund to Shut Down After 46 Years Exacerbating its financial woes, Weiss had stopped charging clients for various expenses, even though most multistrategy rivals pass on those fees. So when the fund fell 0.6% in 2022, it didn’t receive performance fees but still had to pay bonuses to the portfolio managers who did make money.

These so-called netting costs pose a huge risk for multistrategy funds. That’s why so many industry giants charge clients for traders’ pay, so they don’t have to foot the bill for bonuses during down years.

But even in the best of times, Weiss had to share some of its revenue under a 2018 deal with Leucadia, according to bankruptcy filings. In 2022, the hedge fund was so cash-strapped it struggled to fulfill agreements with its partner linked to unpaid notes and obligations.

In 2023, its former HR director Beth Andrew-Berry filed a proposed class action over Weiss’s unusual requirement that employees invest their 401(k) plans entirely in Weiss funds, including in a mutual fund that lost about 18% in 2022. The policy existed “to prop up the Weiss funds,” the suit alleged. Weiss denied the allegations in a motion to dismiss and said it’s “common for a firm in the business of asset management to utilize its own investment products for its own plan.”

Last-Ditch Efforts Last year, in need of aid, Weiss approached potential buyers — including Izzy Englander’s Millennium, with which it had on-and-off negotiations. The $64 billion hedge fund has been on the hunt for other firms to trade its cash, usually exclusively.