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.
New York (HedgeCo.Net) – Idaho Falls resident Daren L. Palmer has been charged with operating a $40 million Ponzi scheme through his unregistered company, Trigon Group, according to the Commodity Futures Trading Commission.
Palmer is being charged with solicitation fraud and misappropriation of pool funds after it was discovered he used client funds for personal expenses and failed to register with the CFTC as a commodity pool operator.
According to the complaint, Palmer allegedly bilked $40 million from investors since at least September 2000, by promising returns of 7 percent monthly and 20 percent annually. From that $40 million, he only placed $4.5 million in his trading accounts.
“This is another unfortunate example of the maxim, ‘If it appears too good to be true, it probably is,’ said Stephen J. Obie, Acting Director of the CFTC.
Palmer fraudulently claimed he was a successful futures trader and that his pool had a successful track record. Palmer doctored false account statements as a means to keep up the appearance. He later admitted to using new capital coming in to pay off older investors, in a typical Ponzi scheme fashion.
Palmer withdrew about $25,000 to $35,000 per month and used the money to pay off credit card debt, build a new home, and purchase snowmobiles. Palmer’s next hearing is scheduled for April 23rd.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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New York (HedgeCo.Net) – Two New York residents were charged yesterday by the Commodity Futures Trading Commission after allegedly misappropriating at least $553 million of client’s funds.
Stephen Walsh of Sands Point, NY and Paul Greenwood of North Salem, NY are being hit with futures fraud in connection with their companies, which include Westridge Capital Management Inc., WG Trading Investors, LP, and WGIA, LLC.
“Defendants treated investor money– some of which came from a public pension fund– as their own piggy bank to lavish themselves with expensive gifts,” said Stephen J. Obie, Acting Director of Enforcement for the CFTC.
According to the complaint, Walsh and Greenwood took approximately $1.3 billion from investors in their entities since 1996. The men allegedly told their clients that all of the funds would be employed in a single investment strategy of index arbitrage.
They then doctored false promissory notes to keep up the appearance to investors. In reality, the funds were transferred to another entity, where Walsh and Greenwood dipped into the cash for personal spending sprees which included horses, residences, and even an $80,000 teddy bear. It is estimated that they withdrew $160 million total for personal expenses.
The CFTC is seeking a statutory restraining order that will freeze their assets while preserving records.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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! Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com
New York (HedgeCo.Net) – The SEC has located and halted a Ponzi scheme targeted primarily at deaf individuals in the United States and Japan.
According to the complaint, Hawaii-based Billion Coupons, Inc. along with its CEO Marvin R. Cooper was able to raise $4.4 million from 125 investors by holding seminars at Deaf community centers.
Cooper allegedly promised investors that their cash would be invested in Forex markets and returns would be in the 25 percent range. In reality, Cooper only invested $800,000 in Forex markets and lost over $750,000 from those trades.
When they couldn’t make their promised returns, they started the Ponzi scheme, where new money coming in is used to pay off older investors. The SEC alleges that Cooper misappropriated at least $1.4 million of those funds to purchase a new home and other personal belongings. The scam has been running since at least September 2007.
"A Ponzi scheme targeting members of the Deaf community is particularly reprehensible," said Rosalind R. Tyson, Regional Director of the SEC’s Los Angeles Regional Office.
The assets of BCI and Cooper have been frozen and a temporary receiver has been appointed. In addition to the SEC charges, the Commodity Futures Trading Commission filed an emergency action yesterday against the two, for violations of the antifraud provisions of the Commodity Exchange Act.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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! Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com
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 – European shares climbed on Friday while most Asian shares fell as investors sought to balance economic worries with a new era of lower interest rates ahead of key U.S. jobs data.
Oil dropped briefly below $60 a barrel before bouncing back to nearly $62 and the dollar was generally weaker.
The latest U.S. non-farm payrolls report is widely expected to show the world’s largest economy continuing to bleed jobs. The median forecast of economists polled by Reuters last week is for payrolls losses of 200,000 in October.
Investors have found few consistent havens except for the yen and some government bonds, with the financial crisis expected to see the world’s developed economies headed for the first full-year contraction since World War Two.
Bloomberg – Komodo Capital Management Pte’s hedge fund outperformed rivals as Chief Investment Officer Angus Cameron employed strategies he developed during Japan’s slump in the 1990s to profit from the global financial turmoil.
The Singapore-based firm’s KC Asia Fund has gained 8.3 percent this year, Cameron said yesterday. Other macro hedge funds, which seek to profit from broad economic trends by trading currencies, bonds and stocks in the region, lost an average of 6.7 percent in the first nine months of the year, according to Eurekahedge, a Singapore-based data provider.
“We traded through Japan during the 1990s,” Cameron, 37, said in an interview. “The strategies that worked then will work now.”
Government bonds “should do well in most markets” as policy makers shift their focus to supporting growth from fighting inflation, Cameron said. Central banks from Australia to South Korea have joined a global effort to cut interest rates, following the year-long credit-market seizure that has toppled some of Wall Street’s biggest investment banks, including Lehman Brothers Holdings Inc.
Telegraph.co.uk – The American Presidential election next month may have significant implications for investors because the US remains by far the largest economy in the world.
Senators McCain and Obama have articulated differing approaches to taxes, trade, foreign policy and the government’s role in its citizens’ lives. The question is, will the candidates’ distinguishing campaign rhetoric will be just that: rhetoric? Will the policies the winner actually puts in place be similar or differ significantly from the Bush presidency?
Research based on the past 80 years shows that American stock markets have performed better under Democrats, while American government bonds performed better under Republicans. These results should be taken with some caveats as we have seen the two major political parties move to the middle of the political spectrum, as has happened in the United Kingdom. For example, Republican President Bush has presided over the largest increases in domestic spending, excluding defence, since the Democratic President Lyndon Baines Johnson.
Bloomberg- South Korean life insurers are shunning U.S. and European corporate bonds because of a rising risk of default and plowing money into domestic debt.
Samsung Life Insurance Co., Korea’s biggest insurer, is diverting $500 million into 10-year government bonds, said Koo Sung Hoon, head of investments at the company. Kyobo Life Insurance Co., the third-largest, is reconsidering plans to invest the equivalent of $1 billion overseas and may put the money to work at home instead, said Cho Ok Rae, chief of international investments.
“Risks are increasing so we are now rebalancing our fixed- income portfolios, which means we are selling corporate bonds we hold in the U.S. and Europe,” Koo said this month in an interview in Seoul. “Corporate default risk will rise.”
