Lehman veteran launches hedge fund

An Lehman Brothers Holdings Inc. veteran is launching a hedge fund focused on investments in distressed structured products. One William Street Capital was founded by David Scherr, who worked for Lehman for 21 years, most recently as the global head of securitized products. He left the company in December. The hedge fund hopes to grow to $1.5 billion in assets under management over the next year and is expected to launch in the second quarter. Five additional principals from Lehman will also work for the hedge fund manager, a source familiar with the situation told Financial News. The fund will focus on investments in structured products including asset-backed securities, mortgage-backed securities and collateralized debt obligations. The firm also plans to launch a private equity fund that will invest in less liquid securities with a minimum investment period of five years. Lehman Brothers will be a significant investor in the fund and will have a minor stake in the company, the source said.