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Nasdaq – A key U.S. House lawmaker on Thursday unveiled draft proposals to bolster the U.S. Securities and Exchange Commission’s powers, to federally regulate hedge funds and to establish a federal insurance office.
The three drafts are the latest to be circulated by House Financial Services Capital Markets Subcommittee Chairman Paul Kanjorski, D-Pa., who is among the lawmakers playing a major role in working to enact broad new regulations for the financial sector. Last week he unveiled a controversial bill which would make it easier to sue credit-rating firms in an effort to hold them more accountable for the quality of their ratings.
Barrons – A big question surrounding BlackRock’s $13.5 billion purchase of Barclays Global Investors, including its iShares exchange-traded-funds business, is how effectively a passive management group can work with an active one.
The combined firm will have more than 9,000 employees in 24 countries. Barclays will retain a 19.9% stake in the firm, which will manage a combined total of $2.7 trillion in assets.
"For two large, successful asset managers, it’s never an easy task to integrate," says Charles Rauch, analyst at Standard & Poor’s, which lowered its long-term credit rating on BlackRock a notch, to single-A-plus, citing "real" integration risk, among other things. However, some of the risk is mitigated by the fact that BlackRock and BGI have few overlapping operations, he adds.
Bloomberg – Paolo Pellegrini, the hedge-fund manager who helped Paulson & Co. make more than $3 billion in 2007 on bets the U.S. housing bubble would burst, resigned to start his own fund, a person familiar with the matter said.
Pellegrini, 52, a manager of Paulson’s credit opportunities funds, left on Dec. 31 in an “amicable” departure, said Armel Leslie, a spokesman for New York-based Paulson & Co. John Paulson, founder of the firm, which oversees $36 billion, couldn’t be reached for comment.
Paulson and Pellegrini became convinced in 2006 that investors were overvaluing mortgage-backed securities whose risk for losses they or credit rating firms had misjudged, according to client letters obtained by Bloomberg News. The firm’s credit opportunities funds soared about sixfold in 2007 as mortgage defaults rose and the value of the securities declined.
