Money Manager Goldinger Closes Up Shop : Consulting: Sources say he has shut his Capital Insight firm and liquidated clients’ accounts amid losses of at least $36 million.

Reeling from what appears to have been an ill-advised bet on the direction of interest rates, prominent Beverly Hills money manager S. Jay Goldinger has shut down his investment consulting firm and liquidated the accounts of his clients amid losses of at least $36 million, sources said Wednesday.

Goldinger’s firm, Capital Insight Inc., was at the heart of disclosures this month by two publicly traded companies, Fort Worth-based Pier 1 Imports and Tustin-based PairGain Technologies Inc., that unauthorized trading by a financial consultant cost them millions of dollars in losses.

Neither company disclosed the name of the investment firm it blamed for the losses. But Goldinger’s attorney, Brian O’Neill, confirmed Wednesday that both corporations were alluding to Capital Insight. O’Neill declined comment on other matters, including the causes of the loss.

Goldinger, 42, assiduously promoted himself as a millionaire bond-investment guru through three syndicated newspaper columns, appearances on television, and a guidebook published by Barron’s advising small investors how to invest in government securities. Although he is usually eager to be quoted on bond-market developments, he was unavailable for comment Wednesday.

Meanwhile, investors and others with knowledge of the case said Goldinger’s trading losses extended well beyond the two companies and may have affected a large proportion, if not all, of his other clients. The size of the assets under Capital Insight’s management could not be learned Wednesday, but sources estimated his clientele at 30 to 45 individuals and corporations.

One source also confirmed that Goldinger’s activities are under investigation by the Securities and Exchange Commission and the Commodity Futures Trading Commission. A spokesman for the SEC refused to confirm or deny involvement; CFTC spokespersons were not available for comment.

But among the issues likely to be under investigation by the regulatory agencies are whether Goldinger adequately disclosed to his clients the nature of his trading; whether he falsified account statements to hide accrued losses; and whether he may have improperly transferred funds from some investor accounts to cover losses in others.

Goldinger evidently started informing investors over the last few weeks of the seriousness of the trading losses.

“He called me out of the clear blue sky on Dec. 19 and said he quit trading, he was closing the office, and he had called in the CFTC regulators himself,” said one Midwest investor who said he lost more than $500,000 from Goldinger’s trading. The investor, who asked to remain unidentified, said Goldinger told him he had also lost a considerable portion of his own money in his trading.

Sources say that some of the trading losses may have been due to a strategy of making massive short sales of futures on Treasury bills, which are traded on the Chicago Board of Trade. Because the prices of T-bills and their futures rise when interest rates fall, short-selling the contracts represents a heavy bet that rates will rise.

That has been a bad bet all year, as interest rates have fallen inexorably. One investor said Goldinger told him the bet turned especially sour at the end of November, when optimism about a budget compromise in Washington accelerated the rate drop. Although much of that optimism later evaporated, rates did not return to their early-November peaks.

As it happens, Goldinger advises against precisely such investment obstinacy in his Barron’s guidebook, published in a second edition earlier this year. “Most investors,” he wrote, “can’t help committing the cardinal sin--they think the market is wrong and they’re right. So . . . they add to a losing proposition and they lose even more as the market continues to drop.”

Goldinger has long been a beneficiary of positive publicity as an investment wunderkind. Having grown up the son of a Westside textile executive, he would regale interviewers with stories of having the Wall Street Journal delivered to his summer camp cabin at the age of 9 and of keeping his net worth marked on a bulletin board in his bedroom at 13.

For several years he purchased season tickets to games of each of the major league baseball teams--at an annual cost of more than $100,000--and donated them for use by underprivileged children.

In 1991, however, the SEC charged him with insider trading violations involving the stock of Thrifty Corp., the drugstore chain. A federal judge dismissed the case by summary judgment earlier this year, but the SEC has filed an appeal.

In that case, the SEC alleged that Goldinger received a tip on Thrifty’s pending takeover by Pacific Lighting Corp. from a client who was a large Thrifty shareholder. According to the SEC, he subsequently passed on the information to Bert Cohen, his then-partner at the Los Angeles investment firm of Cantor, Fitzgerald & Co.

Cohen and others, the SEC said, started trading Thrifty stock options within minutes of the client’s call to Goldinger and made illicit profits of more than $500,000 when the takeover was publicly announced.

For their part, the defendants argued that Goldinger passed Cohen no specific information about the Pacific Lighting deal and that Cohen’s investments were based on his awareness that Thrifty was widely considered a takeover target by stock-market followers.

Times staff writer Greg Miller in Orange Country contributed to this report.