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.
Evening Standard – London’s rich hedge fund managers and private equity executives will quit the UK in droves ahead of the 50% top tax rate next spring.
That is the news from City tax advisers who say they have never been so busy consulting with professionals on how to leave the UK and avoid their tax bill from Revenue and Customs.
Chancellor Alistair Darling has announced that from next April people paid more than £150,000 a year will pay tax at 50%. But the loss of allowances in reality takes that top tax rate to more than 60% for some.
West Palm Beach (HedgeCo.net) – Hedge fund prime broker, Newedge, has started using a Dubai Point of Presence (POP) connection to facilitate their access to the Dubai Gold and Commodity Exchange (DGCX). The new connection has high bandwidth and is more secure than an internet-based connection, the company said.
Amaury de Villemandy, CEO of Newedge Europe and Middle East, commented on its fixed line capacity, saying, “Our investment in establishing direct connectivity to DGCX was based on the increased interest among our clients in capitalizing on the commodity and currency trading opportunities offered by the Exchange.”
Newedge is a 50/50 joint venture between Societe Generale and Calyon. With a presence in 25 locations in 17 countries, Newedge primarily serves institutional clients, providing access to more than 85 exchanges.
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Reuters – Nick Bullman, who told Reuters he has this week placed bets on falling share prices, is concerned that government stimulus packages have not revived bank lending as much as hoped and that conditions remain as tough for companies as they did last year.
"The rally has been a ‘dash for trash’ based on speculation … On Wednesday (I) went short on the Standard and Poor (500) and financials via ETFs (exchange-traded funds)," he said in an interview on Friday.
Bloomberg – Former Bear Stearns Cos. hedge fund manager Ralph Cioffi, indicted for an alleged fraud that helped bring down the securities firm, attempted to use his $2 million redemption from a fund he supervised as collateral for a condominium, U.S. prosecutors said.
Cioffi, 53, also ”rarely” heeded compliance trading measures, the government said in a court filing in Brooklyn, New York, federal court. Cioffi and another former Bear Stearns hedge fund manager, Matthew Tannin, 47, were indicted last year for misleading investors about the health of two hedge funds that failed in July 2007, costing investors $1.6 billion. The implosion helped trigger the credit crunch and the eventual sale of Bear Stearns to JPMorgan Chase & Co.
Bloomberg – John Paulson, the hedge-fund manager whose wagers against the U.S. housing market helped him earn an estimated $2.5 billion last year, bought Bank of America Corp. and Goldman Sachs Group Inc. stock in the second quarter, while adding to stakes in gold companies.
His firm, Paulson and Co., bought 168 million shares of Charlotte, North Carolina-based Bank of America valued at $2.2 billion as of June 30, according to a filing yesterday with the U.S. Securities and Exchange Commission. It was the biggest new purchase in the second quarter for Paulson, 53, and made him the bank’s fourth-largest owner.
Bloomberg – President Barack Obama sent Congress his plan to rein in the $592 trillion over-the-counter derivatives industry, a measure that would cut into a profitable market for banks led by Goldman Sachs Group Inc. and JPMorgan Chase & Co.
The proposal issued yesterday would pressure derivatives users such as banks and hedge funds to move away from opaque customized contracts by imposing higher capital and margin requirements on the instruments. Standardized derivatives would be moved to regulated exchanges or trading platforms and sent through official clearinghouses, according to the draft measure.
Bloomberg – Bank of America Corp. Chief Executive Officer Kenneth Lewis faces more queries about his purchase of Merrill Lynch & Co. after a federal judge refused to approve a $33 million settlement of a lawsuit over bonuses.
The bank agreed on Aug. 3 to settle U.S. claims the bank misled investors while buying Merrill. Yesterday, U.S. District Judge Jed Rakoff in New York said the amount isn’t appropriate if the bank lied about billions of dollars in payments. Rakoff asked for more filings by Aug. 24 and said he won’t rule on the accord before Sept. 9.
The Australian – Blackstone Group posted a wider second-quarter loss, but results beat analysts’ expectations as the private-equity giant reported positive returns and better fund-raising at its credit-oriented and funds-of-hedge-funds businesses.
On a conference call with analysts and investors, chairman and chief Executive Stephen A. Schwarzman said that two-thirds of the companies in Blackstone’s private-equity portfolio expect to see either positive or flat earnings before interest, taxes, depreciation and amortisation, or Ebitda.
That’s compared to 35 per cent of the companies in the Standard & Poor’s 500 that Blackstone expects to see gains in that area.
Pittsburgh Post-Gazette – The family of a Cambria County manufacturer has filed a lawsuit claiming that a New York hedge-fund manager illegally took $750,000 from its trust fund.
The lawsuit, filed by the family of Frank Calandra Jr., was moved to federal court yesterday. It names as defendants Signature Bank Corp. and Cushner & Garvey LLP.
The man the family accuses of taking its money, Edward T. Stein, is not a named defendant.
Mr. Stein was charged with securities fraud in federal court in Manhattan in April. According to the Securities and Exchange Commission, Mr. Stein operated a Ponzi scheme involving some $55 million collected from investors.
Milwaukee Journal Sentinel – Five years after regulators forced the sale of Strong Funds to Wells Fargo and Co. at the height of a national mutual fund scandal, investors in 24 former Strong Funds are moving closer to receiving their share of a $154 million settlement.
A proposal for doling out the money was developed by an independent consultant and has been published on the Securities and Exchange Commission Web site.
The proposal, which awaits SEC approval, would give priority to reimbursing investors in 24 Strong funds whose losses were related to ”frequent trading.” Frequent traders often aim to take advantage of differences between the share price of a fund and the actual value of the securities it holds – a maneuver that can harm the interests of long-term shareholders.
Charity Times – Putting it into perspective, at January 1 2008 there was $9.7trn of hedge funds assets invested, at the end of 2008 it was $3trn, a massive loss in capital.
This year, hedge funds gained 2.41 per cent in March, according to the Barclay Hedge Fund Index compiled by BarclayHedge. The index is now up 0.82 per cent in 2009. ”After an eight per cent sell-off in early March, the S&P 500 Index bounced back to gain 17 per cent from 9 March to 31 March, its largest three-week rally since 1987” says Sol Waksman, founder and president of BarclayHedge. Overall, 15 of Barclay’s 18 hedge fund indices gained ground in March. Hedge funds took modest advantage of March’s upswings in the global equity and credit markets, according to Morningstar’s hedge fund performance summary for the first quarter of 2009.
Highbridge Capital Management, once the world’s biggest hedge fund, was a big winner, with $1bn of net inflows this year, including $225m from majority owner JPMorgan. It ended the quarter with $20bn under management.
Bloomberg – Highland Capital Management LP, the Dallas-based investment firm that’s liquidating its main hedge fund, was sued by attorneys Schulte Roth and Zabel LLP for allegedly not paying $2.83 million in legal fees.
The New York-based law firm initiated a lawsuit in New York state court yesterday, listing what it said were unpaid invoices from June 2008 to this month.
“We believe Schulte Roth overbilled the firm and its funds for legal services,” Highland said in an e-mailed statement. “Highland has paid Schulte Roth nearly $1 million in good faith, and has made every effort to resolve this issue with them.”
