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.
Reuters – U.S. Senator Bill Nelson (D-Fla.) plans to ask the Justice Department to investigate Chesapeake Energy Corp. for potential fraud and price manipulation, an aide to the lawmaker said.
Mr. Nelson’s request comes after Reuters reported on Wednesday [May 2] that Chesapeake Chief Executive Aubrey McClendon ran a $200 million hedge fund that traded in the same commodities Chesapeake produces. A search of Chesapeake’s filings turned up no disclosure of his activities.
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This unique conference features the Tax Practices for Private Equity Funds program and the Effective Hedge Fund Tax Practices program and brings them together to run concurrently, giving attendees the benefit of mixing and matching sessions according to their preference. Plus, earn 14.5 CPE and CLE* Credits!
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Reuters – Macquarie’s Asia hedge fund has exited its short positions in Indian single stock futures in response to a controversial set of proposed tax rules that could lower investment returns.
Instead, it has decided to use a futures contract linked to India’s 50-share NSE index Nifty on the Singapore Exchange to get its short exposure to India, according to an investor letter of the fund seen by Reuters, a switch other funds may also make.
Post Crescent – U.S. Senate candidate Eric Hovde has purchased a bank that received federal bailout money, even though the Republican hedge fund manager says he remains staunchly opposed to the program.
When announcing his candidacy last month, Hovde stressed that he never owned a bank at the time it received bailout money from the federal government. But at the same time he was entering the race, his private equity firm was in the process of acquiring a failed bank that got $9.1 million in bailout money under the Troubled Asset Relief Program, better known as TARP.
Bloomberg – Raj Sethi, a managing director in Goldman Sachs Group Inc. (GS)’s commodity-derivatives trading group, quit after 14 years and may join a hedge fund, according to a person with knowledge of the matter.
Sethi, 35, who once ran the bank’s U.S. power-trading business, left earlier this week, said the person who asked not to be identified because the information is private. Ben Jacobs, a vice president in the commodities group, also quit last week, the person said.
Bloomberg: Hedge funds fell 4.9 percent last year as global stock markets slumped amid fears that the European sovereign-debt crisis would spread and managers struggled with increased market volatility.
The Bloomberg aggregate hedge-fund index (BBHFUNDS) dropped 0.9 percent in December, with long-short equity and multistrategy (BBHFMLTI) funds falling. Macro funds, which bet on global economic trends, rose last month and declined in 2011.
“Managers are probably happy 2011 is behind them,” said Emma Sugarman, global head of capital introduction at BNP Paribas SA in New York , which helps hedge funds meet clients. “The notion of absolute return has changed. In the past, some hedge funds were sold as absolute return, meaning they would always generate a positive return, and clearly that has not been possible.”
New York (HedgeCo.net) – President Barack Obama’s Financial Fraud Enforcement Task Force has gotten a conviction against Ward Onsa, the portfolio manager of New Century Hedge Fund Partners, LP. Ward pleaded guilty yesterday to securities fraud after soliciting more than $5 million as part of an investor Ponzi scheme.
According to the indictment, the defendant operated the investment firm Ward Onsa & Company until 2005 when a series of trading losses and default judgments bankrupted the entity. Thereafter, Onsa organized the New Century Hedge Fund and, between 2005 and 2010, solicited and received over $5 million in investor funds, primarily from Individual Retirement Accounts. Onsa told the investors that their retirement funds would be used to purchase securities, futures contracts and options designed to profit when the Dow Jones Industrial Average reached 10,748. Onsa’s trading theory was that the market would not go above this level. As the market surged past 10,748, however, the investments that the defendant made with his investors’ retirement money plummeted into insolvency.
While the investors were losing their money, the defendant funneled money from the Fund to himself and the defunct Ward Onsa & Company. Onsa further agreed to loan his early investors in New Century $2.6 million from newer investors’ money.
Instead of disclosing the losses, the payments to Ward Onsa & Company or the $2.6 million loan, Onsa issued fake statements to investors showing consistent and steady earnings in the market. Onsa continued to solicit additional money from investors through 2010 and used that new capital to pay back the losses of the early investors.
“Retirement accounts represent hard earned dollars set aside for an uncertain future. Through a web of lies and deceit, the defendant targeted those funds to line his own pockets and prop up his failed investments. The defendant’s criminal decision to tap investors’ IRA accounts as part of his Ponzi scheme reaffirms this Office’s resolve to vigorously investigate and prosecute fraud in the securities and commodities markets,” stated United States Attorney Lynch.
“The defendant continued to solicit investors by showing fictitious gains, both while the fund was losing money and after he had ceased to invest at all. Luring new investors to pay off earlier ones is the classic Ponzi.” FBI Assistant Director in Charge Fedarcyk said.
The defendant faces a maximum sentence of 20 years’ imprisonment on the securities fraud charge.
Opalesque - Singapore-based GFIA, hedge fund and particularly emerging market hedge fund specialists have revisited Brazil, a country that they had dropped from their intensive coverage due to lack of client interest. From 2004 to 2008, the firm were heavily involved in Latin America, advising a fund of Latin hedge funds and keeping an analyst in Sao Paulo.
However the 2008 credit crunch saw a complete change in client interest in the area, so they withdrew to only include coverage of three or four of the larger Latin American funds.
Business Insider – A bunch of hedge funds that had been profiting off the incredible rise in the Swiss franc just got burned.
This morning the Swiss Bank intervened, sending the Swissie down. The bank will buy an unspecified amount of Francs until the exchange rate with the Euro hits 1.20 francs.
Bloomberg – Daniel Loeb, the founder of Third Point LLC, started a reinsurance company that can invest in his $8 billion hedge fund, joining rival David Einhorn in seeking more permanent capital.
Third Point Re, which is based in Bermuda, hired John Berger as chief investment officer and has about $500 million in capital, according to two investors familiar with the plan. New York-based Third Point wants to raise $250 million to $500 million more and plans to eventually sell shares of the reinsurer to the public, said the investors, who asked not to be identified because the firm is private.
Reuters – Hedge funds, betting on globa lmarkets and driven by computer models, were among those hardest hit by Switzerland’s shock intervention on Tuesday to reverse profitable bets on the Swiss franc’s “safe-haven” status.
The Swiss National Bank surprised investors with an exchange rate cap, saying it would no longer tolerate a rate below 1.20 francs per euro and would defend the target by buying other currencies in unlimited quantities.
Bloomberg – A Pennsylvania man admitted to his role in a $17.6 million Ponzi scheme that defrauded more than 260 investors.
Robert Stinson Jr., 56, of Berwyn, pleaded guilty in federal court in Philadelphia today to 26 charges, including wire fraud, mail fraud,money laundering and bank fraud, the Justice Department said in a statement. There was no plea agreement, according to the plea memorandum.
