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Caribbean Net News – The UK Serious Fraud Office is investigating sales of credit-default swaps and structured-finance products, including collateralized debt obligations, prior to the credit crisis, following up an earlier investigation into a hedge fund and a related British Virgin Islands-registered company.
The SFO is looking into whether banks sold such products with flawed valuations, said Sam Jaffa, a spokesman for the government agency in London. No specific companies or credit rating agencies have been targeted under the investigation, he said.
“We’re looking generically at what might give us a cause for concern or a possible lead for finding out more,” Jaffa said in an e-mail Monday. “There’s no suggesting that across- the-board valuations were flawed. However, how valuations are arrived at, what is bundled into the funds and how they were sold are areas of interest.”
Salon – John R. Talbott is a former investment banker with Goldman Sachs and the author of "The 86 Biggest Lies on Wall Street," "Contagion," "Obamanomics," and "The Coming Crash in the Housing Market."
Simon Johnson, the former chief economist of the International Monetary Fund (IMF), is the co-founder of the Baseline Scenario, a Web site tracking the ongoing financial crisis. He is one of the most visible public commentators on the ongoing financial crisis and its causes.
From June to July of 2009, Talbott and Johnson held an e-mail conversation on the following topic:
Bloomberg – Blackstone Group LP, the world’s biggest buyout company, canceled a plan to start a hedge fund that initially aimed to invest as much as $1 billion in Asian companies affected by events such as mergers and reorganizations.
Blackstone decided not to proceed with the Asian event- driven fund “after a review of the market environment and our strategic priorities globally,” New York-based Blackstone spokesman Peter Rose said in an e-mail. The fund was to be managed by Blackstone A.M.N. Advisors.
Most of about 17 A.M.N. team members, including Chief Investment Officer Aaron Nieman, left after the March decision, said four people familiar with the matter, declining to be identified because the information isn’t public. The rest have been transferred to other Blackstone departments, they said. Rose declined to comment on specific personnel.
West Palm Beach (HedgeCo.net) – The Connecticut-based hedge fund manager who had his assets frozen by the SEC last month, Francesco Rusciano, was released to the custody of his parents on a $500,000 bond after a federal court hearing.
According to the SEC’s complaint, Francesco Rusciano solicited investments for two hedge funds, Ponta Negra Fund I, LLC and Ponta Negra Offshore Fund I, LTD, which is the principal of Ponta Negra Group, LLC, located at his residence in Stamford, Conn.
The hedge fund manager also sent out an e-mail to investors saying that his Ponta Negra hedge funds had $59 million in assets under management as of February 2009. According to the SEC’s complaint, the hedge funds had less than $10 million.
The SEC says that Rusciano forged brokerage account statements to make it appear that another hedge fund account had more than $43 million in assets, when it had less than $3 million.
"Rusciano went to great lengths to deceive investors, and the SEC is committed to ensuring that money managers who provide inaccurate information to investors and fail to uphold their fiduciary duties are held responsible for their misconduct," said Rose Romero, Director of the SEC’s Fort Worth Regional Office.
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