Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
New York (HedgeCo.net) -ConvergEx Group, a leading technology company, announced that NorthPoint, its prime services business, has launched a new division dedicated to the formation, performance and management of alternative mutual funds.
The new Alternative Mutual Fund Services division will work with traditional mutual funds and hedge funds that are interested in launching alternative mutual funds.
Jay Jacobs has been hired to lead this new division. An industry veteran with almost 30 years of experience, Mr. Jacobs was most recently a partner at Merlin Securities.
“Today, alternative mutual funds represent less than 1 percent of the $12 trillion mutual fund market. Since we began offering select services to launch alternative mutual funds back in May, we have seen a significant uptick in demand. We believe that trend will continue and our expectation is that alternative mutual funds will reach over 5 percent of the market within the next 10 years,” said Doug Nelson, chief executive officer of ConvergEx’s NorthPoint. “We are thrilled that Jay has come on board to run this new business. He has first-hand experience in every aspect of managing and operating alternative mutual funds, from creating a fund to fund distribution – all of which can be tremendously helpful in helping funds raise assets. No one in the industry is better suited for the job and our customers will benefit greatly from his years of experience.”
ConvergEx’s NorthPoint is an industry-leading provider of integrated prime services. Its full suite of technology-based solutions include prime custody, execution solutions, analytics and reporting, capital introduction, research, commission management and start-up services. Since being acquired by ConvergEx in late 2009, NorthPoint’s customers also have access to ConvergEx’s entire global offering of powerful investment technologies and advanced execution solutions. NorthPoint was recently named a “Top Rated Provider” in Global Custodian’s 2010 Prime Broker Survey.
New York (HedgeCo.net) – Hedge fund services company Esposito Securities won a $1.46 million FINRA arbitration award against $6.5 billion Dallas-based financial services firm WFG Investments, Inc.
“We are very happy that the FINRA arbitration process was confirmed by the Texas District Court. We are gratified that our efforts to protect the firm and its clients were successful.” Mark Esposito, President of Esposito Securities said, “In confirming the Award the court showed that the FINRA arbitration process is binding and final.”
In June 2011 a FINRA Arbitration Panel awarded Esposito Securities over $1.46 Million in damages and attorney fees, along with pre-judgment interest dating back to October of 2009. The Arbitration Complaint alleged that WFG had recruited Esposito employees in violation of a contract between Esposito and WFG, entered into while Esposito was an independent broker for WFG, and induced Esposito employees to breach their contracts with Esposito. The claims asserted included breach of contract, raiding and tortious interference.
Esposito Securities, LLC, is a part of the Esposito Global family, and provides global equity trading services. A growing list of clients use our services, including registered investment advisors, mutual funds, hedge funds, ETF’s, closed end funds and unit investment trusts with trillions of dollars in assets.
New York – EisnerAmper LLP received the North American Team of the Year Award at the STEP Private Client Awards for 2011/12 on September 15. Winners were announced in London at the Hilton in Park Lane, where more than 670 professionals in trusts, estates and private client work came together to celebrate excellence in the industry at this prestigious international event.
Martyn Gowar, Chairman of the Presiding Judges said, “Now in their sixth year, the STEP Private Client Awards highlight achievement among private client lawyers, accountants, bankers, financial advisers and trust managers worldwide. These awards offer an unrivalled opportunity for professionals to demonstrate excellence in their field.”
The judges’ citation for EisnerAmper said, “Personal, confidential and tailored attention to private clients is the hallmark of EisnerAmper LLP as evidenced through their excellent customized service plans.”
In accepting the award, EisnerAmper Partner Brent Lipschultz said, “Tax exposure, risk management and other regulatory concerns present significant hurdles especially when personal wealth is held internationally.”
Lipschultz commented on the efforts of the EisnerAmper International Wealth Advisory team stating “Our mission is to deliver services on a multi-national but client-by-client basis, combining sound tax planning with comprehensive investment and insurance strategies.”
EisnerAmper’s Personal Wealth Advisory Practice partner Jack Meola, who also represented the firm at the Awards event, said, “We’re honored to be recognized by STEP and proud that the judges cited our efforts to protect, preserve and enhance our clients’ financial interests around the world.”
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NYT Magazine – How much time should Raj Rajaratnam spend in prison? Rajaratnam is the hedge fund founder who was convicted in May of trading on illegal stock tips — tips that produced fantastic results for his Galleon Group. Federal authorities compare him with notorious white-collar crooks like Bernie Madoff and Jeffrey Skilling, and they argue for a long time behind bars.
His lawyers, however, say Rajaratnam is a lesser-order felon — “not . . . as culpable as a defendant who affirmatively steals,” as they put it in a pre-sentencing memorandum. The lawyers raise a problem of culture and law: Is insider trading merely an illicit version of a common American cleverness, trading on gossip from a colleague or friend that helps the trader and hurts no one? Or is it the quintessential Wall Street crime, one that has undermined Americans’ faith in the markets?
Cayman Island News – The Children and Youth Services (CAYS) Foundation’s Family Reunification Programme has received a further US$36,585 from Hedge Funds Care Cayman, a charitbale organisation that aims to to prevent and treat child abuse and neglect.
The programme is designed to strengthen vulnerable families during the transitional period when a child is being returned home from the Residential Programme and to provide support to the family once the child has been discharged from care. It takes a strength-based, family centered, and solution-focused approach with families, working with them primarily within their homes.
Reuters – It was a long wait, but the world’s most renowned metals traders Michael Farmer and David Lilley are finally profiting from a big, bearish bet on copper, trouncing rival hedge funds with a nearly 50 percent gain this year.
The $1 billion Red Kite Metals fund has returned close to 20 percent for each of the past two months as copper prices fall to their lowest in a year, industry sources familiar with the fund’s positions told Reuters. That would comfortably rank it among the best-performing commodity funds this year.
This Is Money – These are supposed to be dire days for the once invincible-seeming hedge funds. On Wednesday shares in Man Group crashed by almost a quarter after it revealed clients pulled out $2.6billion (£1.6billion) in funds over the past three months.
The news is a hammer-blow to Man, which only last year bought rival GLG for $1.6billion, and comes after Labour leader Ed Miliband slammed companies’ behaviour at the party conference in Liverpool, warning Britain should discriminate between ‘wealth creators’ and ‘asset strippers’.
The Bureau of Investigative Journalism - When millionaire hedge fund tycoon, Bill Browder realised at the start of the year that recovering world markets were once again heading for the rocks, he was staring down the barrel of an enormous loss.
‘I saw a huge number of negative things piling up,’ the founder and chief executive of Hermitage Capital Management told the Bureau from his West End office. ‘The political situation in the Middle East, the sovereign debt crisis in Europe, the US budget deficit and inflation. I said to myself markets are only [up] because of artificially low interest rates propping this up.’
Market Watch – The Securities and Exchange Commission’s proposal on hedge-fund registration could subject fund managers with less than the $150 million in assets to the regulation.
Hedge funds typically refer to net capital raised when they talk about asset size but, in the upcoming registration, the SEC said the $150 million level refers to “regulatory assets,” or gross assets, which include, among other things, the amount of financial borrowing or leverage the firm employs.
New York (HedgeCo.net) – Citi Prime Finance has released the new survey results on how much hedge funds’ are spending on IT. The survey documents for the first time both the industry’s aggregate expenditure on IT and the average expenditure per hedge fund.
Hedge funds will spend over $2 billion on technology in 2011, with investments in data management platforms and collateral optimisation tools accounting for a significant share of overall expenditure, according to the survey.
Large funds managing $5 billion or more are expected to spend an average of $7.9 million on technology in 2011, more than 13 times the amount forecast for small funds with AUM less than $500 million. Large managers also charge 20%-30% of their technology costs to the fund, while small funds charge nearly the entire IT expense to the management company.
The survey findings also include:
· Bigger “franchise” funds (more than $5 billion AUM) have some IT cost advantages, and better ability to pass on costs, than smaller funds
· More funds are adapting unified data management solutions to consolidate data on risk, accounting, trading, finance and other elements into a single platform.
· Hedge funds are changing their approach to investing in new information technologies, often opting build in-house IT capabilities rather than relying on outside vendors.
· Technology innovations are helping launch new hedge funds, and helping existing hedge funds launch new funds more quickly.
Citi found that 49% of sub-$500 million hedge funds launched in the last five years currently use managed service providers. Only 39% of these small hedge funds host their own infrastructure. Of the large funds that have been in existence for more than five years, only 24% source their technology from managed service providers or hosted vendors.
The findings are based on responses from 75 hedge funds and 15 vendors in the US and Europe that participated in the 2011 Citi Prime Finance IT Trends & Benchmark Survey.
WSJ – The Securities and Exchange Commission accused NIR Group LLC’s Corey Ribotsky of fraud, alleging that the Long Island, N.Y., hedge-fund manager and his firm hid losses and spent investors’ money on cars, a Rolex watch and other luxuries.
The SEC filed its civil complaint against Mr. Ribotsky, his firm and Daryl Dworkin, a former NIR analyst who last year pleaded guilty to federal prosecutors’ allegations of securities fraud tied to the same probe.
New York (HedgeCo.net) – The SEC has charged San Francisco-area hedge fund adviser Kurt Hovan with fraud for lying to clients about brokerage commission rebates and producing phony documents to cover up the fraud during an SEC examination.
“The SEC’s ability to review the records of investment professionals is a cornerstone of our investor protection mission,” said Marc Fagel, Director of the SEC’s San Francisco Regional Office. “We take a particularly dim view of those who compound their fraud on investors by providing false information to our examiners.”
The SEC alleges that more than $178,000 in “soft dollars” were misappropriated, and that the adviser falsely claimed to be using to pay for legitimate investment research on his clients’ behalf. In reality, Hovan was secretly funneling the money for such undisclosed uses as office rent, computer hardware, and his brother’s salary. When SEC examination staff asked Hovan to provide documentation to back up his claims, he created phony research reports. Hovan then provided these phony documents to SEC examiners.
The SEC also charged his wife Lisa Hovan and his brother Edward Hovan for their roles in the fraudulent scheme at hedge fund Hovan Capital Management.
