WEEK IN REVIEW

Czar she blows: Russian undressing

A bull in a china shop does nothing compared to a Russian bear burping and stumbling through the world’s markets, leaving bits and pieces of bad news everywhere.

George Soros, of course, may have made a billion breaking the Bank of England, but investors in his $22 billion group of hedge funds lost 2 billion simoleons in Russia in the past year. But don’t weep yet: Even with Russian holdings “marked down to zero,” says flagship Quantum Fund manager Stanley Druckenmiller, his $10.6 billion fund is up 19% for the year.

Things aren’t so good elsewhere, either. Credit Suisse Group said it had fumbled away $254 million in Russia during the past two months; UBS AG, the world’s second-biggest bank, lost $180 million trading there this month and has twice as much outstanding in loans; Deutsche Bank AG has $746 million in free fall.

Americans with problems include BankAmerica Corp., Bankers Trust Corp.,Chase Manhattan Corp. and Citicorp, who earlier this year had $6.8 billion at risk, the Federal Reserve Board reports. Republic New York Corp.said it’s taking a $110 million hit. Then there’s III Offshore Advisors, a Palm Beach, Fla., hedge fund that invested $900 million in Russian bills and then couldn’t meet collateral demands. Pretty soon this is going to start to add up to real money.

Mutual funds with big Russian holdings, like Lexington Troika Dialog Fund, Phoenix Emerging Markets Bond Fund and Fidelity New Markets Income Fund, got pounded, too, and badly. Even sowbelly futures sunk to a nine-year low on expectations that Russians couldn’t afford as much pork to stuff their pierozhkis with.

The good news? Belgium reported its banks have only $342 million outstanding in Russia. No waffling there.

Fine madness

The good old Securities and Exchange Commission speaks loudly and carries not much of a stick. Over the last baker’s dozen years, the regulator collected only about half the penalties it imposed on malefactors, most of them of great wealth, according to the Wall Street Journal. That’s $2.5 billion that could be used to reduce our tax bill.

Some of the deadbeats are even guests of Uncle Sam, including stock sellers-turned-prisoners Gary Nyman and Steven Wymer, who owe a total of $253 million, and a personal favorite, Steven Hoffenberg, the New York bill-collection king and sometime newspaper publisher, who owes $55 million. He has 19 years to go on the U.S. free-lunch plan, but interest keeps accruing on the penalty while he studies the fine (ahem) points of license-plate manufacture.

Radio-inactive

U.S. Energy Corp., not an IPO to set your Geiger counter clicking, laid off 45 workers at its misnamed Jackpot uranium mine, pending settlement of a lawsuit against the U.S. Department of Energy. The company was government-owned until July 23, when it sold 100 million shares at 14.25. Last week it traded around 2.

Pssst, buddy

PennCorp Financial Group Inc. — that’s the insurance holding company whose stock dropped 26% Aug. 17 when it reported bad earnings and a $75 million investment that wasn’t coming through — fired highest muckety-muck David J. Stone. He’ll remain as a director, but another director, David C. Smith, takes over as chairman, and former executive vice president Keith A. Maib steps up as president and chief exec. The moves, a spokesman said, were made to position the company for a sale.

Remember him?

Jeffrey Vinik, the man who put Fidelity Investments’ Magellan Fund into bonds in a big way a couple of years too soon, dumped most of his high-tech stocks in favor of retailers in the second quarter. Still, his $1.5 billion-asset Vinik Asset Management hedge fund bought 697,000 shares of Intel. Does that constitute Intel Inside trading?

Bloomberg News contributed to this report

closing Quote

“You want someone with an iron stomach.”

— Northfield, Ill. adviser Aaron Izenstark, describing gold-only investor Richard Sacks. Page 3.