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.
West Palm Beach (HedgeCo.net) – Third Avenue Management LLC, the investment adviser to the Third Avenue Funds has launched the Third Avenue Focused Credit Fund, capitalizing on credit, distressed and value equity investing.
“The current market environment provides attractive opportunities for experienced credit pickers like Third Avenue Management to generate meaningful returns,” David Barse, Chief Executive Officer of Third Avenue Management, said, “Portfolio Manager Jeff Gary and Senior Research Analyst Thomas Lapointe will lead the effort of managing the new fund.”
Prior to joining Third Avenue, Gary was at BlackRock Financial, which he joined in 2003 as the Portfolio Manager and head of the high-yield and distressed investment team which managed approximately $17 billion in assets in various mutual funds and institutional accounts.
Lapointe will focus on identifying and researching opportunities in high-yield and bank loan investments. Lapointe has over 17 years of investment experience and was previously responsible for managing approximately $6 billion in high-yield assets, as Co-Head of High-Yield Investments for Columbia Management.
“Third Avenue’s style emphasizes credit selection, total return and a deep value approach,” Gary said, “Our opportunistic mandate allows us to invest in a wide range of credit securities – including bank loans, high-yield and convertible securities – that have the best risk-adjusted return potential which distinguishes the Fund from typical high-yield funds.”
The fund will offer two classes of shares, Third Avenue Focused Credit Fund Investor Class, and Third Avenue Focused Credit Fund Institutional Class.
Third Avenue Management has approximately $14 billion in assets under management and offers value-oriented strategies through mutual funds, UCITS, separate accounts and alternative investment vehicles.
Alex Akesson
Editor for HedgeCo.net alex@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!
The Tribune – The more than $8.8 million judgment awarded to clients of Jeffrey Forrest has been paid, six months after a financial regulatory agency determined that the former San Luis Obispo investment adviser had misrepresented a risky hedge fund as being safe.
Forrest, who owned WealthWise LLC, and Associated Securities, an El Segundo-based broker-dealer with which his firm had been registered to sell securities, abandoned their appeal of the judgment in federal court, according to Phil Aidikoff, a Beverly Hills attorney representing the group of WealthWise investors.
New York (HedgeCo.net) – Richard H. Baker, President and CEO of the Managed Funds Association (MFA) wrote a letter to MFA members this afternoon, highlighting today’s announcement by the Obama Administration requiring all advisers to hedge funds and other private pools of capital, including private equity and venture capital funds, to register with the Securities and Exchange Commission (SEC).
Baker highlights how the Administration’s proposed legislation would:
* eliminate the private adviser exception in the Investment Advisers Act and require hedge fund managers and other investment advisers to private investment pools with at least $30 million in assets under management to register with the SEC;
* eliminate the exemption from registration in the Advisers Act for certain commodity trading advisors registered with the CFTC if the commodity trading advisor acts as an investment adviser to a private fund (defined as a company that would be an investment company under the Investment Company Act of 1940 but for the exceptions contained in Section 3(c)(1) or Section 3(c)(7));
* give the SEC authority to require investment advisers to maintain records and submit reports of information relating to both the adviser and funds it manages, in order to allow for the supervision of systemic risk by the Board of Governors of the Federal Reserve and the Financial Services Oversight Council, and to provide such information to the Board and Council. The reported information must include at least, for each private fund, the amount of assets under management, use of leverage (including off-balance sheet leverage), counterparty credit risk exposures, trading and investment positions, and trading practices. Each adviser must maintain records of such information and make them available to the SEC upon request, and would be subject at any time to periodic, special, or other examinations by the SEC. Information provided by the SEC to the Board or Council would be kept confidential.
* give the SEC authority to require investment advisers to provide reports, records and other documents of private funds to investors, prospective investors, counterparties, and creditors, for the protection of investors or the assessment of systemic risk.
* permit the SEC to keep confidential any information in reports required to be filed with the SEC, except pursuant to requests from Congress or other federal agencies
* provide the SEC with the authority to define the term ‘client’ differently for different purposes of the Advisers Act and clarify other aspects of the SEC’s rulemaking authority with respect to registered investment advisers.
Click here to read the Administration’s press release announcing the proposed legislation.
HedgeCo.net (West Palm Beach) – The U.S. Court of Appeals affirmed a district court’s decision that also dismissed a securities fraud case against New York-based hedge fund investment adviser Hennessee Group LLC.
Judge Colleen McMahon of the U.S. District Court for the Southern District of New York that dismissed claims of breach of contract and securities fraud in South Cherry Street, LLC. v. Hennessee Group. All of South Cherry’s arguments on the appeal were found to be without merit.
The claims were in connection with Hennessee’s investment advice regarding Bayou Management’s hedge funds that were uncovered as part of a large Ponzi scheme, for which Bayou’s principals were found guilty of securities fraud in 2005.
“We are delighted with the Second Circuit’s decision that finds all claims of breach of contract and securities fraud against Hennessee are without merit. Bayou’s Ponzi scheme caused many unfortunate events, but the Court’s decision establishes that Hennessee was not a participant on any level,” said Bennett Falk, Hennessee’s trial counsel and a partner in the securities litigation and regulatory practice group in the Florida office of Bressler, Amery and Ross, P.C.
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UPDATE: HedgeCo.net (West Palm Beach) – Najy N. Nasser, Chief Investment Officer of the Bahamas/UK based hedge funds, Headstart Advisers Limited (HAL) and Headstart Fund, has agreed with the SEC to pay $17.8 million in a settlement regarding a 2003 alleged late trading scheme.
Without admitting or denying the allegations, the civil settlement includes payments of $17 million by the defunct Headstart Fund Ltd (domiciled in the Bahamas), $200,000 by Headstart Advisers Ltd and $600,000 by Mr Najy Nasser, the Chief Investment Officer. This settlement will conclude the case brought by the SEC against Headstart Fund Ltd, Headstart Advisers Ltd and Mr Najy Nasser arising from Headstart’s historic market-timing strategy.
The Commission’s Complaint alleged that the Bahamas hedge fund, Headstart, acting through its United Kingdom investment adviser, HAL, engaged in fraudulent late trading and deceptive market timing of U.S. mutual funds through accounts at U.S. broker-dealers. Headstart has since September 2003 focused its business on other successful strategies.
Nasser said in response to the settlement, “Headstart is very pleased to have reached a settlement. We responded to US concerns about market timing and immediately ceased this element of Headstart’s business in September 2003. We have since worked hard to build up Headstart’s funds using different strategies. As we equalled or bettered our overall returns against our benchmark, we are especially pleased with what we have achieved.
"We have superb long-term performance against both the market and our peer group and have some interesting plans to grow Headstart’s investment business,” he concluded.
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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."
West Palm Beach (HedgeCo.net) – The SEC has proposed rule amendments to substantially increase protections for investors who entrust their money to investment advisers, hedge funds and FoHF’s.
The SEC is seeking public comment on the proposed measures, which are intended to ensure that investment advisers who have “custody” of clients’ funds and securities are handling those assets properly, investment law firm, Pillsbury Winthrop Shaw Pittman LLP, said.
“These new safeguards are designed to decrease the likelihood that an investment adviser could misappropriate a client’s assets and go undetected,” SEC Chairman Mary Schapiro said, “That’s because an independent public accountant will be looking over their shoulder on at least an annual basis.”
The additional safeguards proposed by the SEC include a yearly “surprise exam” of investment advisers performed by an independent public accountant to verify client assets. In addition, when an adviser or an affiliate directly holds client assets, a custody control review would have to be conducted by a PCAOB-registered and inspected accountant.
The SEC’s proposed rule amendments, if adopted, would promote independent custody and enable independent public accountants to act as third-party monitors.
Public comments on today’s proposed rule amendments must be received by the Commission within 60 days after their publication in the Federal Register. The full text of the proposed rule amendments will be posted to the SEC Web site soon, the law firm said.
Alex Akesson
Editor for HedgeCo.Net Email: alex@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!
Siliconindia.com – An Indian-American investment adviser has been sentenced to 10 years in prison following his conviction on 20 counts of fraud with a scheme that bilked 15 investors of $12.5 million.
Amit Mathur, 38, of Shrewsbury, Massachusetts, was also ordered to pay restitution to his victims by the federal District Court in Worcester, the Boston office of Federal Bureau of Investigation (FBI) said in a release.
Bloomberg – Bill Schultheis, amateur mountaineer and investment adviser, says there’s more to life than staring at stock market screens.
His new book, “The New Coffehouse Investor,” says the path to success consists of the following: Get a game plan built around low-cost index funds and revisit it periodically to see if it can maintain your lifestyle in retirement.
The explosion in the number of exchange-traded index funds has created confusion among investors, Schultheis says, with Wall Street caught up in beating the market by using “thin slices” such as sector funds. Investors also need to put performance in perspective by investing in broad index funds and staying with them, the author says.
West Palm Beach (HedgeCo.net) – Hedge fund manager Meridian Global Fund Services Group has launched a hedge fund consulting affiliate team with Joyce E. Heinzerling as head.
The affiliate, Meridian Fund Advisers LLC, will provide hedge fund regulatory and corporate governance best practices advice to hedge funds both within and outside of the Meridian Global client base. In this capacity, Heinzerling will work side by side with her extensive network of leaders in the hedge fund legal and accounting fields.
“As President of Meridian Fund Advisers, Ms. Heinzerling will lead the development and delivery of our new hedge fund consulting affiliate, and help bring us to a position of distinction in the hedge fund administration industry in terms of a value add for our clients," said Randy Troy, President of Meridian Fund Services (USA) LLC.
"Meridian Fund Advisers essentially has been established to broaden and strengthen our dedication to clients in an effort to provide the highest level of client service in light of the increasingly complex issues that now arise in the hedge fund industry resulting from the heightened regulatory environment and exposure to litigation," Mr. Troy added.
Heinzerling joins Meridian Fund Advisers after serving nine years as General Counsel, CCO and Head of Operational Due Diligence at Archery Capital LLC, an investment adviser to emerging manager funds of funds. Prior to joining Archery Capital, Ms Heinzerling spent fourteen years in private practice advising hedge funds, venture capital funds, private equity funds, and mutual funds.
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West Palm Beach (HedgeCo.net) – The Securities and Exchange Commission filed a restraining order yesterday to halt an on-going multi-million dollar Ponzi scheme. The SEC says that Defendant, Toronto hedge-fund manager Weizhen Tang, orchestrated the fraud through an overseas hedge fund and a Texas-based investment adviser.
U.S. District Judge Jane Boyle granted a temporary restraining order, asset freeze, and other emergency relief against the Defendants, including the appointment of a receiver to take control of assets belonging to the Investment Adviser and two Relief Defendants — WinWin Capital Partners, LP, and Bluejay Investment, LLC, d/b/a Vintage International Investment, LLC.
The fraud began as early as 2004, and through the hedge fund Tang raised between $50 million and $75 million from more than 200 investors. According to the SEC complaint, Weizhen Tang (the self-described “Chinese Warren Buffet”) recently admitted to investors that the hedge fund operated as a Ponzi scheme since at least 2006.
Tang specifically targeted members of the Chinese-American community and solicited U.S. investors to directly and indirectly invest in the hedge fund, according to the SEC.
In addition to the emergency relief granted by the Court, the SEC wants permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and civil money penalties against the Defendants.
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Bloomberg – Two years ago, German investment adviser Dieter Kaiser had to board a plane bound for New York to speak with senior U.S. hedge-fund executives.
These days, those same managers visit Kaiser, the director of investment management for Feri Institutional Advisers GmbH, at his office in Bad Homburg, about 10 miles (16 kilometers) from Frankfurt.
“We’re seeing hedge-fund managers here, and they’re wearing ties now,” said Kaiser, 31, whose firm has allocated about $1 billion to private funds for its clients.
