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.
City AM – Billionaire investor George Soros at the weekend became the latest high-profile financier to wade into the bonus debate as he claimed the backlash against banking fat cats on lucrative pay deals is justified.
Speaking in an interview about large profits reported in recent weeks by Wall Street’s biggest banks, Soros said: “Those earnings are not the achievement of risk-takers. These are gifts, hidden gifts from the government, so I don’t think that those monies should be used to pay bonuses.”
New York Times Blogs – Sure, it’s tough being a journalist these days. But if you think the news business is in trouble, try being a journalist turned financier. Some of the reporters who have left their ink-stained professions for the high-paying world of finance haven’t had it easy either.
The latest is Rob Speyer, scion of the Tishman Speyer real-estate empire. As the WSJ reported on Wednesday, a former reporter at The New York Observer and New York Daily News, Speyer is being groomed to take over the New York real estate firm, which recently defaulted on debt tied to a big portfolio of office buildings it bought in Washington, D.C. The firm also is under stress from its top-of-the-market purchase of Archstone Smith, a high-end-apartment landlord, and the Manhattan apartment complexes of Peter Cooper Village and Stuyvesant Town. Speyer tells the WSJ that despite some problems, Tishman Speyer has a “good track record” and $2 billion in liquidity.
Reuters – A brash Kuwaiti financier facing a fraud suit by U.S. authorities was found dead Sunday in an apparent suicide that sent shockwaves through the Gulf Arab financial sector.
A security source told Reuters that Hazem Al-Braikan appeared to have died from a single gunshot wound to the side of the head, while a policeman standing outside Braikan’s house said the well-connected financier, 37, had shot himself.
Braikan was the chief executive of Al Raya Investment, which is 10 percent owned by Citigroup Inc, and had been at the center of a financial scandal that erupted last week.
Guardian.co.uk – The secretive hedge fund manager and philanthropist Chris Hohn last year donated almost half a billion pounds to the children’s charity run by his wife, it emerged yesterday.
The £486m gift follows hefty profits at Hohn’s hedge fund TCI in 2007, and beat the previous year’s donation of £276m. The financier has now donated more than £1bn in total, more than the gross domestic product of countries including Greenland and Antigua.
The funds will be given to the Children’s Investment Fund Foundation (CIFF), the charity that Hohn co-founded with his wife Jamie to help children in poor and developing countries, mostly in Africa, Asia and Central America.
Law.com – Goodwin Procter partner David B. Pitofsky was appointed Monday as receiver of the $1.7 billion Ascot fund put together by financier J. Ezra Merkin, almost all of which was invested with Bernard L. Madoff and lost.
Justice Richard B. Lowe appointed Pitofsky receiver in a lawsuit (People of the State of New York v. Merkin, 450879/09) brought by the New York attorney general’s office seeking recovery from Merkin of $2.4 billion in his client’s funds which he had "recklessly" invested with Madoff despite "clear warning signals" that the funds were being mishandled.
Boston Globe – It’s been a bad few months for New York financier J. Ezra Merkin. First, his hedge funds lost $2.4 billion in the Bernard Madoff swindle. Then, he lost his post as chairman of GMAC Financial Services.
Now, he’s parting with his prized art collection.
Bombarded by lawsuits accusing him of fraud, Merkin and his wife have arranged to sell their impressive collection of paintings by abstract expressionist Mark Rothko, as well as some valuable sculptures by Alberto Giacometti, according to legal papers filed yesterday.
An anonymous buyer has agreed to pay $310 million for the trove, the filing said.
Telegraph.co.uk – Mayor Boris Johnson will welcome guests, thought to include Tony Blair, Elton John and Jemima Khan, who have paid up to £100,000-a-table to be at the event at the former Eurostar terminal at Waterloo.
Despite being dubbed Britain’s most extravagant party, the organisers said it will be more low key.
Arpad "Arki" Busson, the French financier and chairman of the dinner’s charity Absolute Return for Kids, said: "We have cut the costs of staging the event by two-thirds and there are two-thirds less luxury lots too. We have to be reflective and respecting of the times."
Whereas in past years, Prince, Elton John and Stevie Wonder have performed, this year the entertainment will be provided by the London Chamber Orchestra.
Reuters – Man Group, the world’s largest listed hedge fund firm, is likely to extend the independent valuation of its flagship AHL strategy to calm investors spooked by Madoff, sources familiar with the matter said.
AHL, a $25 billion (16 billion pounds) family of managed futures funds which bet on trends in global futures markets, currently uses a mixture of internal and external administrators to value its constituent funds, which tend to be in liquid and easier-to-value markets.
However, with investors more focused than ever on independent administration in the wake of the fraud by U.S. financier Bernard Madoff, Man is ready to embrace a greater balance of third party input.
NineMSN – The trustee overseeing the liquidation of disgraced financier Bernard Madoff’s assets sued another investment fund on Tuesday, claiming it owes Madoff’s victims more than $US1 billion ($A1.32 billion) it withdrew from his firm.
The complaint in Manhattan bankruptcy court alleges Harley International Ltd knew or should have known that the fortune came out of the pockets of victims of Madoff’s giant Ponzi scheme.
Of the $US1 billion ($A1.32 billion) total, the private, overseas hedge fund withdrew $US425 million ($A560.61 million) during the three months before his arrest last year.
Bloomberg – Hedge fund investors’ growing demands for separate accounts may be an overreaction to increasing redemptions and fraud, participants said at an industry conference in Hong Kong this week.
Investors are demanding accounts that allow them to tailor investments, see trades and get out when they want, instead of the traditional way of pooling their money in a fund, as managers try to curb redemptions and after U.S. financier Bernard Madoff’s conviction for running a Ponzi scheme.
A record $155 billion was pulled from hedge funds last year, according to Chicago-based Hedge Fund Research Inc., while capital outflow may accelerate to $168 billion this year, a Deutsche Bank AG survey in March showed.
Boston Globe – Investors of disgraced financier Bernard Madoff have filed 18 lawsuits against Massachusetts Mutual Life Insurance Co. in an effort to recoup $3.3 billion that its hedge fund group lost in the scandal. But the Springfield insurer is trying to distance itself from the ordeal and says it has no liability in the matter.
MassMutual maintains that the losses racked up by investors in its hedge fund group, Tremont Group Holdings Inc., are their own – and not the responsibility of the insurance company. Tremont had the second-largest loss among Madoff clients after Fairfield Greenwich Advisors, a New York hedge fund that lost $7.5 billion.
Bloomberg – Stanford Group Co.’s court-appointed receiver and securities regulators asked a U.S. judge to deny requests by hundreds of investors to join the regulatory lawsuit at the heart of an $8 billion fraud investigation.
The receiver, Ralph Janvey, and the U.S. Securities and Exchange Commission yesterday filed papers in federal court in Dallas opposing the requests by more than 45 groups of investors and creditors who have asked permission to join the SEC’s suit against R. Allen Stanford.
“Allowing all the investors to intervene in the enforcement action would destroy any hope for an efficient distribution of assets,” Janvey said in a court filing late yesterday. He said he’s working “as quickly as possible to release more accounts through a certification process” designed to free all frozen funds not directly linked to the suspected fraud.
Most of the groups asking to join the SEC’s fraud case are investors whose brokerage accounts were frozen along with Stanford’s personal and corporate assets when regulators sued the Texas financier, two associates and three affiliated companies on Feb. 17. Stanford is suspected of orchestrating the fraud through the sale of high-yield certificates of deposit by Antigua-based Stanford International Bank.
Last week, Janvey won court approval to release $4.6 billion from about 28,000 frozen brokerage accounts. U.S. District Judge David Godbey extended the freeze on more than $1 billion in about 4,000 remaining Stanford accounts, most of which belong to Stanford employees or executives or are linked to investments issued by the Antiguan bank.
