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.
News1130.com – The Securities and Exchange Commission is continuing its investigation of possible insider trading involving hedge fund Pequot Capital Management and its founder Arthur Samberg, according to a letter to investors obtained by The Wall Street Journal.
The SEC has been examining whether Pequot traded Microsoft Corp. shares on confidential information provided by a former employee of the computer company who was later hired by Pequot.
Bloomberg – Pequot Capital Management Inc., once the world’s biggest hedge-fund manager, was cited in at least 44 private reports from exchange watchdogs in the past four years alerting U.S. regulators to potential insider trading, market manipulation or other misconduct, government documents show.
Trades linked to Google Inc., Cox Communications Inc., International Securities Holdings Inc., Premcor Inc. and dozens of other companies prompted surveillance units policing U.S. exchanges to make the referrals to the Securities and Exchange Commission, according to agency records obtained by Bloomberg News. Thirty-six reports flagged possible insider trading. Four indicated possible manipulation and four were labeled “other.”
Reuters – Hedge fund industry icon Arthur Samberg’s startling decision to shut Pequot Capital shows how a firm’s reputation matters as much as its returns.
For decades Samberg, who founded Pequot more than two decades ago, delivered strong performance no matter how markets behaved, enticing investors to funnel in so much cash that the firm managed $15 billion in its heyday in 2001. When the U.S. government last year reopened a probe into allegations of insider trading in Microsoft Corp, skittish investors left quickly.
Boston Globe – Prominent hedge fund firm Pequot Capital told investors on Wednesday it will shut down because of a reopened government probe into possible insider trading.
"Public disclosures about the continuing investigation have cast a cloud over the firm and have become a source of personal distraction," the firm’s founder Arthur Samberg, long one of the hedge fund industry’s best-known managers, wrote in a letter obtained by Reuters.
"With the situation increasingly untenable for the firm and for me, I have concluded that Pequot can no longer stay in business as an investment adviser."
New York Times – In the rarefied world of hedge funds, he is one of the greats — a stock-picker who managed to make money, bull market or bear, for more than two decades.
But on Wednesday, Arthur J. Samberg told his investors that his long, successful run was over. Mr. Samberg, 68, said he had reached a “painful conclusion” to wind down his $3 billion investment firm, Pequot Capital Management, because a long-simmering investigation into insider trading at the fund was heating up once again.
24/7 Wall St. – According to a civil suit filed today by the Securities Exchange Commission in the Southern District Court of New York, John-Paul Rorech, a bond salesman at Deutsche Bank Securities, and Reanto Negrin, a former portfolio manager at hedge fund investment advisor Millennium Partners L.P., were charged with insider trading in credit default swaps of VNU N.V. VNU, now Nielsen Company, is a Dutch media conglomerate that owns Nielsen Media and other media businesses.
According to Scott W. Friestad, Deputy Director of the SEC’s Division of Enforcement, “This is the first insider trading enforcement action involving credit default swaps.”
New York (HedgeCo.Net) – The SEC charged seven Wall Street professionals yesterday, alleging an insider trading ring that reaped over $11.6 million in illegal profits.
British residents Nicos Achilleas Stephanou of UBS and Ramesh Chakrapani of Blackstone Advisory Services are being accused of disclosing nonpublic information about pending corporate acquisitions to five other finance professionals, including hedge fund manager Joseph Contorinis of Jefferies & Company.
“It is unconscionable when these highly paid individuals abuse their access to sensitive information and enrich themselves at the expense of others," said Scott W. Friestad, Deputy Director of the SEC’s Division of Enforcement.
According to the complaint, the illegal trading took place from at least November 2005 until December 2006. Companies in which private information was dispersed include Albertson’s, ElkCorp and National Health Investors.
Achilleas Stephanou, George Paparrizos, Konstantinos Paparrizos and Michael G. Koulouroudis were also named in the complaint.
With public outcry against the SEC at an all-time high in lieu of the handful of recent fraud cases, the agency is vamping up its efforts to investigate and expose corrupt practices.
“Market professionals who may have engaged in insider trading, or may be tempted to, cannot rest comfortably in the belief that their wrongdoing will go undetected,” said Daniel M. Hawke, Director of the SEC’s Philadelphia Regional Office.
In addition to the charges brought on by the SEC, Sephanou, Contorinis, Koulouroudis and George Paparrizos will face criminal charges in New York state.
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
Reuters – A hedge fund manager, a brokerage trader and a financial adviser were charged on Thursday with insider trading in the stock of supermarket chain Albertsons Inc, reaping total profits of about $7.5 million, according to court documents.
The criminal complaints were filed in U.S. District Court in Manhattan against Joseph Contorinis, a former employee at Jefferies Asset Management LLC, as well as trader Michael Koulouroudis and financial adviser Nicos Achillea Stephanou, whose employers were not immediately known.
Jefferies was not mentioned in the complaint against Contorinis. Firm spokesman Tom Tarrant said Contorinis left a year ago. He declined to comment on the charge or arrest of Contorinis by the FBI on Thursday.
New York (HedgeCo.Net) – A Blackstone Group executive has been sued by the U.S. Securities and Exchange Commission after allegedly fronting an insider trading scam that involved supermarket chain Albertsons.
According to the complaint, Managing Director Ramesh Chakrapani tipped off a friend with private information regarding the acquisition of Albertsons in 2006 by private equity firm Cerberus, before it was announced to the public. The SEC alleges Chakrapani’s actions raked in about $3.6 million in illegal profits.
“We are shocked by this alleged breach of the law and violation of our own compliance policies and ethical standards,” said Peter Rose, spokesman for Blackstone.
The original acquisition, valued at $17.4 billion, included splitting up the Albertsons stores between a consortium of buyers, including Supervalu, drugstore chain CVS and the New York-based Cerberus.
At that time, Albertson’s Inc. was the nation’s second-largest supermarket chain. The SEC is alleging that the Blackstone team, led by Chakrapani, advised Albertson’s on the deal.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
