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.
TimesOnline – Hedge funds and private equity groups are deeply anxious that a wave of proposed European legislation on disclosure could push them out of business, with little resistance from the Tories.
Hedge funds and private equity firms are desperate for Lord Myners, the City Minister, and Lord Mandelson, the Business Secretary, to help them to fend off new rules that would force them to reveal more about their investment portfolios and to seek approval for increased borrowing requirements.
On the advice of the Business Secretary, the funds and private equity groups have beefed up their lobbying teams and have earmarked an estimated €10 million (£9 million) for a campaign against a regulatory regime that they say would be highly punitive. The funds are banking on the Treasury and Lord Mandelson to fight off the regulations, which are expected to be agreed in March.
Canada.com – Holding a hedge fund conference at a casino may not be the best optics for an industry that was cast as one of the free-wheeling gamblers of the financial crisis, but players in the fledgling Canadian sector meeting in Niagara Falls this week have plenty of other things to focus on.
With investors demanding more disclosure about risk and liquidity exposure, it comes as no surprise that transparency is on the tip of everyone’s tongues at the World Alternative Investment Summit Canada at the Fallsview Casino Resort.
“Transparency is a big thing here in Canada,” Tom Hockin, chairman of the Expert Panel on Securities Regulation, told delegates to the summit, which ends Wednesday.
First Post – German prosecutors are investigating executives at the sportscar firm over allegations of share-manipulation.
Porsche denied any disclosure irregularities but many hedge funds and investment management firms were left wrong-footed after it made a shock announcement that it held more than 50 per cent of VW’s shares. German regulator BaFin dropped its initial investigation but re-opened it after claims that the incident was bringing the entire German stock market into disrepute.
Ex-chief executive Wendelin Wiedeking is among the Porsche figures being investigated by the German authorities over share manipulation claims. Yesterday Porsche’s headquarters were raided in the course of investigations into recent trading activities.The allegations revolve around the failed takeover of Volkswagen, during which Porsche took large positions in VW stock. Prosecutors allege that inside information was leaked in pursuit of the failed bid.
Reuters UK – Some hedge funds will leave the UK if draft new European law is not changed, said one manager present at a meeting this week with the Treasury, in which the industry expressed grave doubts about the rules.
Proposed new EU rules to force disclosure of leveraged positions and give regulators more control over borrowing levels could drive away managers, David Stewart, the head of Odey Asset Management, told Reuters in an interview.
"They’d have to (leave) in some cases. If you put in the leverage rules and (the fact) that Cayman funds couldn’t be sold into the EU, I don’t know how it operates," he told Reuters.
"There will be some people who go back to America."
Reuters UK – Pension fund manager Hermes has called for a shake-up of the hedge fund industry, demanding greater transparency and fee structures closer aligned to performance.
The asset manager, which runs BT’s giant pension fund, said it wanted to set up an action committee to help drive through reforms on disclosure.
"I believe that hedge funds want to do the right thing," Matteo Dante Perruccio, head of Hermes’ hedge fund arm, told The Sunday Times.
Bloomberg – A group of hedge funds offered to increase disclosure to head off demands from politicians on at least two continents for more transparency.
“We know which way the wind is blowing,” said Andrew Baker, chief executive of London-based Alternative Investment Management Association, the industry’s largest lobby group. “We see a lot of this as inevitable and we’d like to put ourselves in a position to say, ‘You don’t have to drag this out of us.’”
European leaders meeting in Berlin on Feb. 22 said they want to subject the $1.4 trillion industry to more regulation because hedge funds “may present a systemic risk” to world economies, according to German Chancellor Angela Merkel.
MSN UK News – A hedge fund body has thrown its weight behind regular disclosure of large holdings and risks to regulators, as calls grow for greater scrutiny of the industry.
The Alternative Investment Management Association (AIMA), said on Tuesday it supported regulators being able to get information from large hedge funds to build up a regular picture of systemically significant holdings and risk exposure.
The move by AIMA, which represents more than 75 percent of hedge fund assets worldwide, comes with the industry under pressure for greater regulation and the Hedge Fund Standards Board (HFSB) facing criticism for the low number of funds signed up to its voluntary standards on governance and disclosure.
Investment Consultant – Reports that U.S. Sens. Carl Levin’s and Charles Grassley’s new bill on hedge fund regulation will force funds to publicize the names of clients are untrue, the senators said.
"Contrary to some press reports, the Grassley-Levin bill to regulate hedge funds does not require the disclosure of hedge fund clients who merely invest in the fund," they said. "Instead, the bill requires disclosure of a hedge fund’s beneficial owners who profit from the fees generated in operating the fund. Such ownership information has already been requested and provided on a routine basis for years in the voluntary hedge fund registrations filed with the Securities and Exchange Commission."
Bloomberg – Paulson & Co., the hedge fund run by billionaire John Paulson, made at least 295 million pounds ($420 million) since September by short selling Royal Bank of Scotland Group Plc.
Paulson held a short position of 0.87 percent in Edinburgh- based RBS on Sept. 19, according to regulatory filings. The shares traded at 213.5 pence at the time, and Paulson’s disclosure indicates he borrowed and sold almost 144 million RBS shares with plans to buy them back at a lower price. He reduced his short position to less than 0.25 percent, or about 98.6 million shares, as of Jan. 23, according to a filing yesterday.
Bloomberg - Marc Dreier, the New York lawyer accused of cheating hedge funds, said he told his 19-year-old son he could have properties worth $12.5 million after the teenager agreed to spend the summer with him, prosecutors said.
Assistant U.S. Attorney Jonathan Streeter in New York made the disclosure yesterday in a letter urging a federal judge to deny bail to Dreier, who is accused of defrauding investors of hundreds of millions of dollars. Streeter said statements made by Dreier to the receiver of his law firm, Dreier LLP, aren’t “credible” and that Dreier may have assets hidden overseas.
Dreier, 58, was arrested Dec. 7 on charges that he persuaded two unidentified hedge funds to give him more than $100 million by falsely claiming he was selling at a discount notes issued by Sheldon Solow, a New York developer. Prosecutors later said “very sophisticated investors” lost $380 million. In yesterday’s letter, they said the loss topped $400 million.
Wealth Bulletin- In January, 14 of the UK’s largest hedge funds, including Man Group, Brevan Howard and Gartmore, backed the Hedge Fund Working Group’s best-practice standards.
These aim to improve governance and disclosure and to promote transparent and independent valuation.
Six months on, however, only one, unnamed, hedge fund beyond the 14 working group members, has signed up to the code.
Sir Andrew Large, chairman of the working group, believes it is unrealistic to expect hedge funds to sign up immediately.
Wealth Bulletin- A spokesman for the HFWG confirmed last week that the guidelines, which were aimed at raising governance levels across the traditionally secretive industry, have found no support beyond the original 14 signatories – including Man Group, Brevan Howard, Och-Ziff Capital Management and CQS.
At the publication of the 28 principles more than five months ago, HFWG chairman Sir Andrew Large had urged investors to help take the matter forward, adding that this was essential to ensure a wide adoption of the disclosure-based voluntary initiative.
