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.
MSN – Two agencies with oversight of the financial markets are trying to coordinate their regulations to eliminate differences involving similar types of investments and instruments.
The Securities and Exchange Commission, the government’s primary markets watchdog, and the Commodity Futures Trading Commission — which oversees the trading of oil, gas and other commodities as well as financial instruments — have battled in the past over regulatory turf and found separate supporters in Congress.
But as lawmakers craft an overhaul of the nation’s financial rules and consider the Obama administration’s sweeping proposal, the two agencies recently reached an agreement on sharing regulation of the over-the-counter derivatives market. Derivatives are traded in a $600 trillion unregulated market worldwide.
Citywire.co.uk – The Serious Fraud Office (SFO) is to probe UK banks for evidence that complex financial products were mis-sold to consumers before the recession hit.
SFO director Richard Alderman plans to investigate the sale of complicated financial instruments like credit default swaps and collateralised debt obligations. The SFO has changed its tactics and will take a more active tack with investigations and will intervene to prevent future frauds, according to a report in The Times.
SFO staff are already investigating Madoff’s UK operations, hedge funds accused of over valuing securities, AIG UK and the collapse of Weavering Capital, according to The Times. The government has also asked its fraud taskforce to examine the collapse of MG Rover in 2005. And the workload is set to grow with the decision to look into the Keydata saga, as reported by Citywire this week.
HedgeCo.net (West Palm Beach) – One of the first no-load, open-end mutual funds designed to replicate broad-based hedge fund performance characteristics, the ‘IQ ALPHA Hedge Strategy Fund’ (IQHIX) has marked its one-year anniversary on June 30th, 2009.
For the trailing 12-month period, the fund was down -2.58 percent, compared to a loss of -26.21 percent for the S&P 500.
“The performance over the past year can be attributed to a number of factors, including the ability of the fund to hold both long and short positions, and the liquidity of the ETFs used to represent asset class exposures,” said Adam Patti, IndexIQ’s Chief Executive Officer. “As a result, we were able to continuously execute our strategy during the period, something not all hedge funds could do.”
The fund works by optimizing the relative index weights among six hedge fund strategies, Equity Long/Short; Global Macro; Emerging Markets; Fixed Income Arbitrage; Equity Market Neutral; and Event Driven.
The funds do not invest in hedge funds, but use ETFs and a variety of other highly liquid financial instruments to provide exposure to the components of the index in approximately the same weighting. It employs leverage totaling 25 percent of the portfolio to magnify returns.
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Guardian Unlimited – Three "distressed debt investors" – hedge fund Polygon, restructuring specialist Oaktree and private equity firm Alchemy – have taken control of Countrywide, Britain’s biggest residential estate agent, which was bought by US private equity firm Apollo less than two years ago for about £1bn, mostly financed by debt. Together, they have taken a majority stake for one-third of the price paid by Apollo.
Distressed debt investors, which specialise in buying financial instruments relating to troubled companies at rock-bottom prices, have been saying for two years that buying debt on the "secondary market" – where company loans are traded after the original lender has sold the debt on – was too expensive. Now, they appear to be judging it the right time to move back in.
New York (HedgeCo.Net) – SEC Commissioner Luis Aguilar said his agency should be given the authority to regulate hedge funds after urging Congress “to close the glaring loopholes in securities regulation.”
Aguilar, one of the agency’s five commissioners, is among many who are calling for greater oversight in an industry that has been ravaged by turmoil and most recently, fraud.
The SEC has been accused of lax regulation after a tumultuous year where many financial institutions imploded. That belief was further fueled after the string of recent fraud cases involving intricate Ponzi schemes, incling the Bernard Madoff scandal that swindled billions out of investors. Even since his infamous arrest, there have been a handful of cases that have surfaced, leaving a wake of angry investors with their fingers pointed to the SEC.
Mary Schapiro, who Barack Obama appointed as head of the SEC, has come out in favor of a mandatory registration by hedge funds, although she has not vocalized any wrong doing by the agency in recent months.
“Currently, the SEC is prohibited from exerting jurisdiction over particular financial instruments that seem to fall squarely within the agency’s mission,” Aguilar said, while stating his belief that the merging of the SEC with the Commodity Futures Trading Commission would remedy the situation of who regulates what.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
Reuters – The Obama administration plans to tighten the nation’s financial regulatory system, including stricter federal rules for hedge funds, credit rating agencies and mortgage brokers, the New York Times reported in Sunday editions.
The broad changes include increased oversight of the complex financial instruments that helped spawn the current economic crisis, the newspaper said on its website Saturday night.
The newspaper based its story on interviews with officials as well as confirmation hearings for senior administration appointees, and a recent report by an international committee led by Paul Volcker, one of President Obama’s chief economic advisers.
Globe and Mail – Amaranth Advisors LLC and two of its former traders have reached a settlement with U.S. regulatory staff over the alleged manipulation of natural gas futures prices.
The deal, which was submitted to the U.S. Federal Energy Regulatory Commission, could end the long case against hedge fund traders Brian Hunter and Matthew Donohue.
A spokesman for Mr. Hunter, a Calgarian who made more than $100-million trading natural gas for Amaranth before the hedge fund collapsed, declined to comment.
The commission accused the traders last year of manipulating prices on the New York Mercantile Exchange, and proposed a $291-million (U.S.) fine.
