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.
HedgeCo.net (West Palm Beach) – Hedge fund manager Bandon Capital Management, LLC, has made it’s flagship investment strategy, DIRS – Directional Interest Rate Strategy – available to investment advisors through Adhesion’s WealthADV UMA platform.
The flagship strategy, celebrating it’s 5th year anniversary at the end of this month, seeks to provide investors with absolute returns, uncorrelated with the equity and fixed income markets by investing in the US Treasury Market using ETF’s or mutual funds and is available to non-accredited investors.
Bandon is focused on delivering the attractive investment characteristics of alternative investing – absolute returns with low correlations – to the mass affluent and small institutional investors while minimizing or eliminating many of the structural negatives including high minimums, high fees, long lock ups and lack of liquidity and transparency.
”Every day we hear from advisors sharing the frustration of their clients, whose account balances have been decimated and are not yet reflecting the economic recovery they keep hearing about.” Bill Woodruff, Founder and Managing Principal, said, ”Increasingly, advisors are recognizing the benefit of allocating a portion of their portfolio to absolute return strategies – just like large institutional and ultra HNW investors – and are knocking on our door. We could not be more pleased with the opportunity to be included on the Adhesion platform which has many benefits including an open custody approach that enables advisors and their clients to access Bandon’s strategies through Schwab Institutional, Fidelity, TD Ameritrade and Pershing”.
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HedgeCo.net (West Palm Beach) – ”One of the focal points of the Obama Administration’s Financial System Regulatory Reform Plan is to seek the passage of legislation that would require hedge fund managers (as well as other private fund managers) to become registered as investment advisors with the SEC and be in compliance with the applicable requirements under the Investment Advisers Act,” HedgeOp Compliance said, announcing the launch of a new service to help managers deal with current registration issues.
There are presently three bills pending in Congress and a recent proposal from the Treasury that would achieve that goal if passed. ”We are seeing a lot of activity as hedge fund managers look to get ahead of the curve on these requirements and starting the process sooner rather than later,” Bill Mulligan, the CEO of HedgeOp said, ”In addition to allowing for key thoughtful planning, addressing the registration issue early will provide a great deal of comfort to investors and prospective investors.”
The newly launched ADVassist is designed to provide focused registration and compliance guidance, the hedge fund consulting firm said, to not only complete the registration process, but also to create a foundation for development of a compliance culture and infrastructure.
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Caymen Net News – Local hedge fund experts have reacted favourably to last week’s proposals by the Inspector General of the US Securities and Exchange Commission (SEC) to increase fund regulation.
The SEC has proposed that regulation of hedge funds and other investment advisors should be tightened in the wake of the SEC’s failure to stop Bernard Madoff’s $65 billion Ponzi scheme.
Don Seymour, former Head of the Investment Services Division of the Cayman Islands Monetary Authority (CIMA) and Managing Director of dms Management Ltd, said:
“These are meaningful suggestions that are worth consideration. If implemented, they would both enhance protections to investors and respect the privacy of private investment funds, in stark contrast to recent disclosure proposals put forward locally by individuals that do not address systemic risks and betray the private nature of investment funds.”
Reuters Blogs – The big winner in the Obama administration’s financial regulatory reform package is the beaten-up hedge fund industry.
Hedge funds get a particularly “light touch” when it comes to government oversight in the Obama plan. Essentially, the administration is calling for a reinstatment of a Securities and Exchange Commisison rules that requires managers to register with the agency as investment advisors. The rule was overturned by the federal courts, but many large hedge funds remained registered with the SEC–even though they weren’t required to do so.
Reuters – Hedge fund managers, administrators and investors have gathered in Monaco for the annual GAIM industry conference following a tough year marked by poor performance and client outflows.
Below are selected quotes from the first day of the conference:
JONATHAN FEENEY, INVESTCORP INVESTMENT ADVISORS:
"In the last five years or so … everything was flying and no one cared about risk management. It’s only when problems arise that it suddenly becomes a focus, and then it’s too late.
"With a new manager, it’s horrible to say this, but it’s got to the stage now where you want to check the office exists. It’s the paranoia now post-Madoff."
Bloomberg – Fion Ye, who led the Pinpoint Rising China Fund to a 70.9 percent gain last year, has started a new asset management company aiming to profit from the country’s growing sway over global commodity markets.
Ye and former Pinpoint Investor Advisor Ltd. Chief Executive Officer Alex Li are setting up the Hong Kong head office for Everest Investment Advisors Ltd. Their first fund began investment on May 4 with initial capital of about $45 million, 60 percent of which came from outside investors, Li said in an interview yesterday.
New York (HedgeCo.Net) – Two senators are pushing for greater regulation of hedge funds, introducing legislation that would call on the U.S. government to oversee them.
Michigan Senator Carl Levin, a Democrat, and Iowa Senator Charles Grassley, a Republican, passed the legislation on Thursday, amidst a much broader attempt by President Barack Obama to vamp up the entire regulatory system. It also comes at a time when the administration is still in talks over how to distribute the remaining $350 billion in the Troubled Asset Relief Program.
“We need to regulate firms that are big enough to destabilize our economy if they fail," said Levin. "It’s time to subject financial heavyweights like hedge funds to federal regulation and oversight to protect our investors, markets and financial system."
The overhaul of the regulatory system is intended to restore faith in an economy that has been shaken by fear. In addition to tighter regulation of hedge funds, the broader plan will include greater oversight of mortgage lenders and credit rating agencies.
Regulation of hedge funds has long been a debate in the financial world. While some push for greater transparency, hedge funds have taken the defensive, saying that they provide plenty of transparency to their clients, with performance reports and other data usually available via a secure website. However, the collapse of many major hedge funds along with the handful of fraud cases has forced the government to try again.
The closest that hedge funds have come to regulation was when they were required to register as investment advisors with the U.S. Securities and Exchange Commission. That requirement was overturned in 2006.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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New York (HedgeCo.Net) – As the investigation continues into what has turned out to be the largest fraud in history, more and more investors are coming forward who saw the red flags early, refusing to do business with Bernard Madoff.
According to a report published by the Independent, investigators are now hearing stories from many banks and investors who believed early on that Mr. Madoff had been faking his stellar track record. These investors complained to the Securities and Exchange Commission, only to have the agency merely give him a slap on the wrist.
According to a complaint sent to the SEC in 2005 by Boston accountant Harry Markopolos, a few hedge fund managers who did business with Madoff Investment Securities were weary that Madoff was “eating the losses” and doctoring returns.
Markopolos also allegedly warned the SEC that Madoff was in fact, running a giant Ponzi scheme. This of course, turned out to be the case when he was arrested last week after confessing to his sons that Madoff Investment Securities was essentially “one big lie,” and had bilked about $50 billion out of trusting investors.
Other red flags included the fact that his returns were steady and always on the up and up, posting returns of over 10 percent a year, while most legit funds experience some sort of down time. In addition, his company used a small, relatively unknown auditing firm whose list of clients was not very impressive.
The SEC forced Madoff to register as an investment advisor in 2006, which he did while avoiding further scrutiny. Investment advisors are not subject to routine SEC investigations; rather they are performed based on their potential risk.
Many believe he was able to evade investigations due to in part to his high-profile role on Wall Street. As one of the founders of the Nasdaq stock exchange, he regularly advised the SEC on electronic trading issues.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
New York Post – Corporate raider turned activist investor Carl Icahn is having a tough year.
The Far Rockaway, Queens native’s hedge funds are suffering their first losses since the 72-year-old opened them in 2004. The losing streak, which started midway through 2007, is expected to continue when Icahn Enterprises, the publicly-traded holding company for his hedge funds and other investments, reports earnings on Tuesday.
Shares of Icahn Enterprises, which include the hedge funds and other businesses, have plummeted nearly 50 percent this year as investors have backed away from their initial enthusiasm for the activist investor. His funds were up about 2 percent last month, but are down roughly 6 percent for the year, according to investors.
