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.
Times Online – A new front is opening up in the battle between London and New York to be the world’s dominant financial centre.
Hedge funds, and the thorny question of where they decide to do business over the coming months, could mark a turning point in the delicate balance of power between the two market capitals.
Despite widespread fears that hundreds of funds are poised to collapse, any shake-out in the industry will still leave hundreds of healthy firms with billions to invest.
Experts say that some of the industry’s biggest funds are considering whether to move billions of dollars worth of assets across the Atlantic to the United States in the wake of the collapse of Lehman Brothers, the Wall Street investment bank.
Boston Globe – US Representative Barney Frank yesterday staked out the next battlefront in the economic crisis gripping the world: more regulation of hedge funds, investment banks, and other financial institutions.
Frank, who heads the House Financial Services Committee, blamed a lack of strict oversight for the failures of Wall Street investment banks such as Bear Stearns Cos. and Lehman Brothers Holdings Inc., as well as dozens of subprime mortgage companies. He said hedge fund investments in arcane securities based on those mortgages deepened the crisis, which has spread worldwide. In contrast, heavily regulated commercial banks escaped the crisis largely unscathed, Frank said.
"The cause of this problem was a lack of financial regulation in the industry," the Massachusetts Democrat said at a Newton City Hall press conference, one of two events he held in the Boston area yesterday. "If the regulated institutions had made loans, we would not be in the crisis we’re in."
Los Angeles Times – Big Wall Street investment banks have designed and marketed schemes enabling non-U.S. taxpayers, including offshore hedge funds, to evade millions of dollars in taxes each year on U.S. stock dividends, Senate investigators have found.
Some banks have been crafting for more than 10 years transactions designed to enable their foreign clients to dodge U.S. taxes on dividends, while the Internal Revenue Service failed to act to prevent the abuse, two senators say.
A yearlong investigation by a Senate Homeland Security and Governmental Affairs subcommittee, whose results are to be made public Thursday, found that the evasion of dividend taxes adds up to billions of dollars in revenue lost to the U.S. Treasury over the past decade.
IRS Commissioner Douglas Shulman is scheduled to testify on the issue at a hearing Thursday by the investigative subcommittee. Executives of Lehman Brothers Holdings Inc., Morgan Stanley and Deutsche Bank, and from several hedge funds also are expected to appear as witnesses.
New York Times Blogs – Jack Nash, a former chairman of Oppenheimer & Company who helped pioneer the modern hedge fund business, died July 30 in Manhattan. He was 79.
He died at Mount Sinai Medical Center after a long illness, according to his family.
Mr. Nash, who fled Nazi Germany with his family at the age of 12, joined Oppenheimer as a trainee in 1951 when it was still a small Wall Street investment firm. He left briefly to work for his father’s textile business, but returned to the firm in 1954.
Mr. Nash became the company’s president in 1974, and its chairman in 1979.
At Oppenheimer Mr. Nash met Leon Levy, his longtime business partner. They specialized in leveraged buyouts and transformed the company into one of the world’s largest mutual fund businesses.
CNN Money – No one would dare go so far as to say that the Wall Street job market is bright.
Through June, financial firms of all stripes have shed an estimated 63,000 jobs over the past year, according to the latest employment figures from the Labor Department. That’s due in large part to the housing slump and credit crisis.
The pain is particularly acute on Wall Street. Investment banks and brokerages have shed an estimated 7,600 jobs, or roughly 4% of their workforce during the past year, according to the latest figures from the New York State Department of Labor.
If previous market downturns are any guide, analysts project that Wall Street could cut anywhere between 20% to 25% of its workers if the economy gets even worse.
But despite this, there are some financial firms hanging out the "Help Wanted" sign.
Star News Online- Dozens of hedge funds, private equity groups and other investors have plunged into the beaten-down mortgage market in recent months, buying tens of thousands of distressed loans and foreclosed properties around the country. They hope to profit from the woes of banks and other investors holding mortgages that have plummeted in value as home values sink and defaults soar.
They are buying them from Wall Street investment banks eager to rid themselves of bad assets. Merrill Lynch & Co., for example, said this week it would sell mortgage-linked investments once valued at $30.6 billion for just $6.7 billion to Lone Star Funds, a distressed-debt investor in Dallas.
Many of the hedge funds, run by former Wall Street and lending industry executives, claim they can do a better job than banks or other investors of modifying mortgages at terms that consumers can afford.
