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.
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.
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.
Bloomberg – Colonial First State, Australia’s biggest asset manager, may seek an alliance with a hedge fund to offer customers a strategy capable of profiting in rising or falling markets.
The manager of about A$130 billion ($103 billion) has A$4 billion of client money in five boutique funds. Sydney-based Colonial started the alliance business in 2002 to broaden the range of strategies offered and has tie-ups with firms such as the Al Gore-backed Generation Investment Management LLP.
“We don’t have anyone who specializes in absolute returns,” Graham Hand, Colonial’s general manager of funding and alliances, said in an interview in Sydney. “If we can get the right idea working, that would compliment what we’re doing. So we’re looking at a few possible deals in that space.”
Globe and Mail – When Mark Bloom was arrested last week in New York for allegedly bilking clients of North Hills Fund, the case marked a new low in the hedge fund world.
Not just because Mr. Bloom had allegedly stolen $13.2-million (U.S.) from investors, sent false financial statements and lied repeatedly about the fund’s holdings. What really galled prosecutors was that Mr. Bloom had secretly invested client money in a Canadian-based hedge fund and then bitterly complained to regulators when the fund manager was charged with stealing money from investors, sending false financial statements and lying about the fund’s holdings.
Then, when a court-appointed receiver recovered the bulk of the money Mr. Bloom had invested in the Canadian fund, he managed to divert most of the money to himself.
"This action demonstrates the length to which unscrupulous individuals will go to defraud investors," said Stephen Obie, acting director of enforcement of the Commodity Futures Trading Commission (CFTC), which filed charges against Mr. Bloom along with the U.S. Attorney’s Office in New York.
Bloomberg – Bernard Madoff’s alleged Ponzi scheme may cost insurers who cover financial institutions more than $1 billion as they pay legal costs for investment managers who gave client money to Madoff, an industry executive said.
Insurers who sell such coverage never expected, or charged their clients, for the possibility of investor losses in such a massive fraud, said Greg Flood, the president of the management liability practice at Ironshore Inc., the Bermuda-based insurer.
“This isn’t supposed to happen in America,” Flood said. “There will be extraordinary losses paid for this year.” About $1 billion in claims costs industrywide “wouldn’t be too difficult to imagine.”
Reuters – Swiss private bank Union Bancaire Privee (UBP) may pull client money out of hedge funds unless they set up independent administrators, the Financial Times said on Wednesday.
The Geneva-based bank, one of the world’s largest investors in hedge funds, declined to comment on the report, which cited an internal memo to instruct managers.
Investors have blamed the absence of independent administrators as a key factor in Bernard Madoff’s success in setting up an alleged fraudulent Ponzi or pyramid scheme. Madoff was arrested earlier this month on accusations of a $50 billion fraud.
