KEVIN D. FREEMAN, 28 March 2012
It appears that the Copper River Hedge Fund was shorting the market during the fall of 2008. By all accounts, that would be viewed as a profitable market position. And, in hindsight, the stocks sold short did ultimately collapse as the Hedge Fund had expected. However, Copper River did not profit from the declines.
To the contrary, the firm was put out of business. The former head of the firm, Marc Cohodes, has (according to the NYT article) reportedly testified regarding his belief that Goldman Sachs was illegally naked short selling while pretending to properly borrow shares for their client. He further appears to contend that Goldman forced his firm to cover their positions in order to cover up their naked short selling. The net effect was that this Hedge Fund, although on the right side of the trade since the market collapsed, was put out of business before they could profit.