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) – Northern Trust has been named the Best Overall Hedge Fund Administrator by HFMWeek in the magazine’s inaugural U.S. Service Provider Awards. The awards recognize companies that have outperformed their peers during 2008-2009 and demonstrated financial progress, growth and genuine innovation.
“Northern Trust was recognized for the strength of its service offering and for demonstrating business momentum and product innovation during a challenging period for the hedge fund industry,” said Lucy Guest, senior publishing executive for HFMWeek.
“The importance of a Third Party Administrator is now being disseminated throughout the industry so that all funds, including start ups, are embracing the need for the service.” Joe Goldstein, Managing Partner at G&S Fund Services, said. “Prior to Madoff, start up and smaller funds were reluctant to use third party administrators even though we provided them with a higher quality of financial management at a lower cost.”
What Goldstein sees as a change in the industry is that the necessity of a hedge fund administrator is now understood by investors. “This change is contributing to the growth of the hedge fund administration business, as funds who were reluctant to use hedge fund administrators are now either turning over their financial administration to a third party, or at very least using them to review and confirm their NAV calculations.” Goldstein said.
Northern Trust has a growing hedge fund servicing business, with assets under administration of $75.5 billion as of June 30, 2009, an increase of 54 percent over the prior year. Northern Trust services nearly 300 hedge funds worldwide as of June 2009, and in the previous 12 months had provided global operations services to more than 120 new fund launches and transitions.
“We’re delighted to be recognized as best overall administrator as it validates our approach of blending innovative technology, strong process and automation with the exceptional service standards that set Northern Trust apart from our competitors,” said Matt Ward, Head of Fund Administration-North America for Northern Trust. “Ultimately this is a service business and our experienced and attentive people are the real strength of our offering.”
Bloomberg – First came the biggest bear market since the 1930s, then Bernard Madoff’s $65 billion Ponzi scheme and the threat of increased regulation. Now hedge funds have a new concern: getting caught on tape as the government expands its use of wiretaps to ferret out insider trading.
Prosecutors, using secretly recorded phone conversations for the first time against hedge funds, alleged Oct. 16 that billionaire Raj Rajaratnam and five others made $20 million by swapping material inside information on companies such as Hilton Hotels Corp. and Google Inc. They may charge at least 10 more people soon, people familiar with the matter said last week.
Bloomberg – The Galleon Group insider-trading investigation may sap investor confidence in the hedge-fund industry, already under scrutiny after Bernard Madoff’s Ponzi scheme, said Michael Coleman, chairman of the Singapore chapter of the Alternative Investment Management Association.
“It’s obviously not good news for the hedge-fund industry from the top level, but it seems to be a very specific case,” Coleman said in an interview on Bloomberg Television today.
Galleon founder Raj Rajaratnam was arrested in New York on Oct. 16 for alleged insider trading, charges which he denies. The U.S. government is reviewing regulation of the financial industry, including a plan that would create an agency for monitoring consumer financial products and bring hedge and private-equity funds under federal scrutiny.
Bloomberg – Bernard Madoff’s brother, sons and niece were sued by a liquidator over claims they spent $198.7 million of victims’ money and treated the con man’s investment firm as their personal bank.
The lawsuit against the brother, Peter Madoff, sons Andrew and Mark Madoff and niece Shana Madoff Swanson, all of whom held positions at the defunct firm, was filed yesterday by trustee Irving Picard in U.S. Bankruptcy Court in New York.
Bloomberg – Geneva’s funds of hedge funds saw client inflows for the first time in 11 months in August, halting a slump that accelerated after losses related to Bernard Madoff’s Ponzi scheme.
Net inflows were $30 million, after withdrawals of $2 billion in July, according to data compiled for Bloomberg News by Singapore-based Eurekahedge Pte. Total assets in Geneva-based funds of hedge funds climbed almost 1 percent to $14.3 billion, after slumping 74 percent during the previous 19 months.
The Denver Post – The plaintiffs allege Agile inappropriately placed their funds into a high- risk, unsuitable investment called the Agile Safety Variable Fund, which destroyed their retirement nest eggs.
The Safety Fund, despite its name, was a leveraged hedge fund that had invested 85 percent of its money into fraudulent funds run by Thomas Petters and Bernard Madoff, the complaint alleges.
Petters, a Minnesota businessman, is awaiting trail on charges he led a $3.5 billion Ponzi scheme. Madoff is in prison after pleading guilty to running what authorities estimate was a $65 billion Ponzi scheme.
Bloomberg – Hedge funds in Edinburgh say they escaped any direct losses from Bernard Madoff’s Ponzi scheme. That doesn’t mean they’re not living with his legacy.
Clients are demanding more disclosure, quicker access to their money and individual, rather than pooled, accounts after Madoff hurt the loosely regulated business, according to managers in the Scottish capital.
Bloomberg – Union Bancaire Privee, the Swiss hedge-fund investor whose clients lost about $700 million with Bernard Madoff, plans to cut 10 percent of its workforce this year after assets under management declined.
“UBP should reduce its staff by 10 percent over the course of the year, from a headcount of 1,372 at the end of December, through redundancies, early retirements and not filling vacant positions,” said Jerome Koechlin, spokesman for the Geneva- based firm.
Caribbean Net News – The trustee liquidating Bernard Madoff’s business told a judge that two Cayman Islands and Bermuda hedge-fund firms accused of profiting from the fraud are ignoring his lawsuits seeking a total of $230.7 million in damages.
Trustee Irving Picard on Wednesday asked the US Bankruptcy Court in Manhattan to file default notices against the Cayman Islands-based Primeo Fund and Bermuda-based Alpha Prime Fund Ltd., court papers show. Two offshore firms sued earlier for a total of $1.2 billion also have ignored Picard’s lawsuits.
Newsday – Bernard Madoff’s top lieutenant in his Ponzi scheme is scheduled to plead guilty Tuesday to federal charges in what many legal observers believe is a cooperation deal that could lead to trouble for some major hedge fund operators.
Frank DiPascali Jr., 52, of Bridgewater, N.J., had been a key Madoff aide, working in a closely guarded office on the 17th floor of Manhattan’s Lipstick Building, where the Ponzi scheme operated. It was DiPascali, investigators and defense attorneys said, who dealt with the numerous hedge funds and was involved in mailing myriad false account statements sent to thousands of defrauded clients.
CityWire.co.uk – Bernard Madoff’s wife Ruth is being sued for $44.8 million (€31.9 million) by the trustee for the victims of his $50 billion Ponzi scheme.
Court-appointed trustee Irving Picard is the first person to take action against Madoff’s family members, all of whom have denied knowledge of the scam.
Picard’s lawsuit states: ‘Regardless of whether or not Mrs Madoff knew of the fraud her husband perpetrated…she received tens of millions of dollars…to which Mrs Madoff had no good faith basis to believe she was entitled.’
Bloomberg – Geneva banks, which began investing client money in funds of hedge funds during the 1960s, are struggling to rebuild the business after market losses and Bernard Madoff’s Ponzi scheme cut assets by 72 percent.
The assets of funds of funds managed from Geneva slumped to $15 billion in May from $54.2 billion at the end of 2007, according to data compiled by Singapore-based Eurekahedge Pte. Almost 25 percent of the 227 funds operating in the city at the end of last year shut in the first five months of 2009 and only six opened, less than a fifth of the 2008 number.
