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Minneapolis Star Tribune - The local hedge fund industry has canceled its Winter Ball, scheduled for the Minneapolis Club in December, "due to volatility within the hedge fund industry."
The big shooters at Deephaven Capital Management, Whitebox Advisors, Pali Capital, plus other firms and their lawyers and accountants are a little stressed lately. And not all their clients are happy about their performance.
"In its place, we plan to host a ‘happy hour,’ as much of the feedback included the desire to get together, albeit on a smaller scale," according to a note last week from the Twin Cities Hedge Funds Care Committee. "We are in the process of confirming a venue and anticipate the location to remain downtown."
Times Online UK - Litigation departments at the City’s leading law firms have grown significantly busier in recent weeks as investors turn to legal action to recover losses suffered as a result of the financial crisis.
Although lawyers have been predicting an upturn in litigation since the credit crunch began last summer, that has yet to emerge as investors were reluctant to admit to holding negative positions.
But Jonathan Kelly, a partner at Simmons & Simmons, the international law firm, said that financial institutions, hedge funds, municipalities and other investors had begun considering legal action as the market showed signs of settling.
Mr Kelly said that there had been a significant increase in instructions and conflict referrals in recent weeks — an observation confirmed by lawyers at other City firms.
Vindicator - A bankruptcy judge said Wednesday he may let Delphi pursue wider fraud claims against the Appaloosa Management hedge fund, which backed out of a deal to invest $2.55 billion in the auto supplier.
Appaloosa had led a group of investors to inject as much as $2.55 billion into Delphi in exchange for stock once it reorganized, but the investors withdrew from the deal in April. Delphi Corp. sued Appaloosa in May, accusing it of deliberately and secretly working to sabotage Delphi’s effort to satisfy a condition of their deal: that Delphi should raise $6.1 billion in exit financing to support its emergence from Chapter 11.
On Wednesday, lawyers for Appaloosa sought the right to improve its position in the lawsuit, but in doing so the hedge fund may have opened the door to wider charges.
Judge Robert Drain had ruled in July that Delphi could pursue a claim that Appaloosa had misrepresented its intentions. Delphi lawyers argued that Appaloosa manager David Tepper, a Goldman Sachs alum and well-known hedge fund manager, gave his verbal commitment to do the deal when he testified in December 2007. They described his testimony as a declaration that “a deal is a deal,” which to them meant that Appaloosa’s withdrawal constituted fraud.
Daily Telegraph - Lawyers are being galvanised on behalf of a raft of hedge funds which claim the financial watchdog has illegitimately extended its powers and caused "wide-spread capital destruction."
One said: "The FSA’s remit is to maintain orderly markets - the markets were working fine, only the banks were going bust. With one swoop, the regulators have wiped out perfectly legitimate businesses and have cost some funds millions. They have gone for the big political hit without a thought for the damage they are wreaking. There may be unintended consequences but it’s outrageous and illegal."
The backlash follows a week in which the multi-billion pound hedge fund industry has been plunged into crisis. Prime brokers in London estimated that 35 per cent of European hedge funds were organising emergency measures to avoid closing funds as a ban on short-selling has hamstrung managers at a time when they need flexibility to survive.
New York Times - Frazzled traders and money managers spent an angst-filled weekend struggling to fathom the sweeping bailout the Bush administration proposed for financial institutions in the United States and what it will mean for the world’s markets.
At big banks, staff members rushed to update trading records before the opening bell sounded on Monday morning in New York. Quants, those math-loving traders who use complex computer models to hunt out investments, tinkered with algorithms.
Some hedge fund managers, unsure where the markets will go or what the government will do, sought safety in cash. Securities lawyers sorted through new rules from the Securities and Exchange Commission that will require such funds to disclose their bearish bets on financial companies.
And in between, everyone tried to catch up on some sleep.
But after the Dow Jones industrial average cartwheeled a dizzying 1,023 points in 24 hours on Thursday and Friday, ending the week virtually where it began, just about the only thing people seemed to agree on was that this ride was not over.
Reuters- It’s turning into a busy summer for U.S. lawyers who advise hedge funds as the industry faces growing questions about potentially manipulative trading and regulators are knocking at fund managers’ doors.
With the markets in turmoil, the loosely regulated sector is under increasing scrutiny. The U.S. Securities and Exchange Commission recently sent subpoenas to more than 50 firms regarding possibly abusive trading activity.
Some funds have sought advice to be sure they are complying with the rules, which include new limits on short-selling.
Others are calling for help to set up new funds as managers try to find ways to make money in a rough market.
Caymen Net News- On Monday, 21 July, lawyers representing PricewaterhouseCoopers filed a formal petition in Grand Court to put the liquidation of several failed hedge funds under court supervision.
Chief Justice, Anthony Smellie, granted all of the petitions, which will now put the court in charge of overseeing the liquidation of the four collapsed funds. The lawyers said that it would be in the “public’s interests” to have the liquidation be under court supervision.
In June the Cayman Islands Monetary Authority (CIMA) confirmed that the “Grand Island” funds were put into voluntary liquidation by the funds’ shareholders. Three of the four funds involved were registered with CIMA in 2006 and one other was an unregulated fund, not registered with CIMA.
When lawyers representing PwC commented to Chief Justice Smellie about the media attention being given to the case he replied simply, “It’s not every day a local fund gets into trouble.”
Times Online- Proper consultation is the rock upon which good regulation is founded. And for the Financial Services Authority, consultation is in its DNA. So when it does the unthinkable and drops a bombshell without warning or discussion — as last week with the announcement of the Short Selling Instrument — people are bound to be left shellshocked and confused, especially if they are lawyers under pressure from clients to advise on what needs to be done.
Designed, allegedly, to bring greater transparency to the market in the aftermath of the recent rights issues shambles by HBOS and Bradford & Bingley, the measure could have been called the “short notice instrument” because there were mere days between its announcement and its operational effect. The FSA’s justification for the move was that market conditions gave rise to increased potential for market abuse and therefore “immediate measures” were necessary to “maintain market confidence and prevent potential abuse during rights issues”.
Daily Telegraph- The High Court has rejected an audacious last-gasp bid by hedge funds to block Candover’s £1.8bn bid for oil services group Expro.
Hedge funds holding around 25pc of Expro - led by Mason Capital and Sandell Asset Management - asked the court on Monday to block the deal and force Expro’s board to reconsider a riskier - but higher - offer from US giant Halliburton. But yesterday Mr Justice David Richards dismissed the argument by the hedge funds’ lawyers that under Takeover Panel rules Expro should have run an auction between the two rivals.
"I do not accept the criticisms of the board made by the shareholders," said Mr Justice Richards.