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.
Alibaba News Channel – European companies emerging from the credit crisis should start looking over their shoulders: activist investors are set to return from hibernation, working more closely than ever with institutions to effect change.
The activists, who favour methods such as changing balance sheet structures, ousting chairmen or selling off non-core units, had little to do during the crisis when buyers were scarce and there was little appetite for transformatory change. But now they are set to gain from a political will to drive large institutional investors towards more active investment and away from a mentality of simply selling stocks they don’t like, while a purge of more leveraged, short-termist funds has cleared the ground for activists to tap a wealth of new opportunities.
"Pushed and shoved by the regulators, mainstream institutions are beginning to countenance interaction with activist investors," said a senior figure at one activist firm.
Reuters – U.S. federal prosecutors asked securities regulators to delay a civil case against two former Bear Stearns hedge fund managers while they hold grand jury hearings in building a criminal case against the pair.
Fund managers Ralph Cioffi and Matthew Tannin were arrested and indicted in June, the first executives to face federal criminal charges in fallout from the subprime mortgage crisis. Both pleaded not guilty. A trial date has not yet been set.
The Securities and Exchange Commission had also begun civil securities fraud charges against Cioffi and Tannin, accusing them of misrepresenting the investments of two funds they oversaw.
A memorandum filed on Wednesday by U.S. Attorney Benton Campbell in the U.S. District Court in Brooklyn asked for a stay in the civil case until the conclusion of the criminal case.
"A stay is necessary in the civil case to preserve the secrecy of the ongoing grand jury proceedings," the memorandum said.
The document said the SEC was consulted and took no position on the stay, and that the defendants had declined to comment on the request.
Bloomberg – Days after a March negotiating session to buy San Francisco’s Citicorp Center building for $370 million, Park Hyeon Joo is in the air on a Korean Air flight bound for Seoul, sipping a glass of red wine. He’s not celebrating.
Park, founder and chairman of Seoul-based Mirae Asset Financial Group, the biggest mutual fund company in South Korea, has just given up on his plan to open a branch of Mirae in Los Angeles despite its large Korean-American community.
He’s seen firsthand the swoon in U.S. markets triggered by the subprime mortgage crisis. Recalling the flight, he says he took out his laptop and spent the next three hours writing a somber memo to his 16,900 employees.
New York (HedgeCo.Net) – Troubles keep arising for Bear Stearns, even after its demise and the resulting takeover by JPMorgan Chase. It seems investors are still targeting Bear after the implosion of their two failed hedge funds last year that kicked off the subprime mortgage crisis.
Federal prosecutors, along with the SEC, may bring criminal charges against Ralph Cioffi and Matthew Tannin, who ran the High-Grade Structured Credit Strategies Enhanced Leverage Master Fund and the High-Grade Structured Credit Strategies Master Fund.
The two funds at one point managed upwards of $20 billion, with a majority of their assets invested in subprime-mortgage backed securities. As homeowners started defaulted on their mortgages at record rates, these securities plummeted in value, and creditors started to demand more collateral.
Even an influx of $1.6 billion by Bear Stearns could not save the funds, and assets were subsequently frozen. Both funds eventually filed for bankruptcy with only a small portion remaining of investor’s money.
A failed request at a Cayman Islands liquidation sealed the deal for Bear, who no longer could shield the fund’s assets from investors.
The question arises of whether or not Bear Stearns overstated their securities values to shareholders. At times, the two managers were quoted as reporting the performance of the funds as “positive,” when in reality, it was down as much as 38%.
According to the Wall Street Journal, securities fraud charges may be filed against the two men by next week.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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Bloomberg- Hunter Shively, global co-head of UBS AG’s commodities business for the past seven months, is resigning to join a start-up hedge fund that is raising money to trade energy futures.
Shively, 38, will stay on for two months to oversee the handover of the commodities unit’s North American energy operations, Jerker Johansson, head of UBS’s investment bank, said today in a memo to employees. Todd Morakis, who was named commodities co-head with Shively in November, will run the Stamford, Connecticut-based unit, according to the memo, which was confirmed by Sarah Small, a spokeswoman for UBS in London.
UBS, which has had the biggest net losses of any bank from the U.S. subprime-mortgage crisis, said in January it will reduce trading in power and natural gas in Canada, and pull out of some European energy markets. Shively plans to join Sasco Energy Partners LLC, a Westport, Connecticut-based firm that is looking to raise $750 million, according to a person familiar with the matter who declined to be identified.
News Channel 8- A U.S. Treasury official said Monday the global credit crunch is gradually calming following efforts by the Federal Reserve and other central banks.Clay Lowery, assistant secretary for international affairs at the U.S. Treasury, said the Fed and other central banks have coordinated their actions to protect the financial system from possible disruptions after the U.S. subprime mortgage crisis surfaced last year.
As a result, the availability of credit has improved "modestly," Lowery told the Foreign Correspondents Club of Japan.
He said U.S. financial institutions reported more than $300 billion in subprime-related losses, but that was alleviated by the raising of an additional $200 billion in capital.
