Later that year, Optionable collapsed in a trading scandal. Nordlicht, who resigned as non-executive chairman soon after, was not directly implicated. His co-founder, Kevin Cassidy, was. He was sentenced to prison for the third time in his career, this time for 30 months for deliberately misstating the value of natural gas derivatives in conjunction with an employee of BMO Financial Group.
As Optionable imploded, Nordlicht was already building his Platinum business, having launched the Value Arbitrage fund in 2003 with about $30 million.
Shortly after his release, Cassidy was hired as managing director of business development at Agera, the successor company to Glacial, along with other former Optionable and Glacial employees. Agera did not respond to requests for comment.
The 47-year-old Nordlicht lives an unflashy life in suburban Westchester County with his wife and children, usually driving himself to and from work at Platinum's sleek midtown Manhattan offices.
He has strong ties in the New York-area Jewish community, the source of some of his funds' investors. These include, according to public tax filings for 2014, a charitable trust set up by day-trading pioneer Aaron Elbogen, who was fined $1.4 million for illegal trading and bookkeeping while the chief executive of Datek Securities Corp; the Century 21 Associates Foundation, led by department store executive Raymond Gindi; and the SFF Foundation, a non-profit controlled by the Schron family, known for its real estate investments. All declined to comment or did not respond to requests for comment.
Nordlicht has enriched his investors with his focus on higher-risk debt that can yield far more than traditional fixed-income investments. And after years of near-zero interest rates, it's a strategy increasingly sought out by big, otherwise conservative institutional investors hungry for higher yields.
Still, many big money investors who have looked at Platinum have walked away. Cambridge Associates, which counsels some of the world's largest pension funds and endowments, recommended to a client around 2010 that it not invest with Platinum and has not changed its stance on Nordlicht's firm since then, according to people familiar with the situation.
In an email, Cambridge said it does not "discuss specific investment managers." It added: "We can say that we take our due diligence process very seriously."
Among institutional investors that have considered putting money with Platinum but ultimately chose not to are the endowment of Yeshiva University, which is the alma mater of several Platinum employees, and large hedge fund allocator GAM, according to people familiar with the institutions.
One institutional investor that did get in is New York City's Correction Officers' Benevolent Association, according to two people familiar with the situation. The New York Times reported in June last year that Norman Seabrook, the union's leader, was under investigation by the U.S. Department of Justice for potentially using his position to enrich himself. A broad subpoena from prosecutors requested that the union supply information related to Platinum, but the connection was not clear, according to the report.