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Times Online – Weavering Capital, one of London’s oldest hedge funds, was today in the hands of liquidators just a week after it discovered that its flagship fund’s main investment was a derivatives trade with an offshore company controlled by its founding chief executive.
PricewaterhouseCoopers, the auditor and consultancy, confirmed this morning that it had been appointed as Weavering Capital’s liquidator.
It is understood that PwC is investigating suggestions that fraudulent activity may have taken place.
It is not known whether the Financial Services Authority has been contacted. The FSA did not immediately return a call seeking comment.
New York (HedgeCo.Net) – The tug of war over Wachovia continued yesterday, as Citigroup and Wells Fargo tried to reach an agreement over the future of the Charlotte-based bank.
According to transcripts from a teleconference held between U.S. District Judge Lewis Kaplan and the companies, a solution might be in the cards that entails Wachovia being split between Citigroup and Wells Fargo.
"There are negotiations between Wells Fargo and Citi about a possible grand solution that would preserve the shareholder value for Wachovia as represented by the Wells Fargo deal, but that would involve not a single choice between Citigroup and Wells Fargo," said David Boies, who represents Wachovia.
For now, both Citigroup and Wells Fargo extended a cease-fire that was originally ordered on Monday by Federal Reserve Officials for fears of market retributions.
Citigroup was believed to have a lock on Wachovia, after their $2.1 billion bid bought them the branch system of the troubled bank. Though not the best deal for Wachovia, having their assets seized by the FDIC was not a viable alternative. After they accepted the proposal, Wells Fargo came to the table and offered an astounding $15.1 billion for the entirety of Wachovia, sending Citigroup into a rage and forcing the issue of an exclusivity agreement.
Jane Sherburne, who also represents Wachovia, hopes that they can “facilitate in whatever way we can a negotiated settlement of this matter without escalating the issues in a litigation setting.”
In addition to the acquisation concerns, Citigroup is also going after Wells Fargo, seeking $60 billion in damages for interferring with the deal.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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New York (HedgeCo.Net) – In an emergency hearing yesterday, U.S. District Judge John Koeltl left the door open for Wachovia to consider better offers, saying the law “appears” to permit bids from other potential buyers. This decision comes at a time when Wells Fargo is considering a $15 billion proposal, a substantial increase from Citigroup’s $2 billion bid for the Charlotte-based bank.
“What was an institution that needed assistance now has another transaction it views even more favorably,” said Judge Koeltl at the hearing.
Citigroup, who placed a bid for the branch system of Wachovia last month, is looking to the future while trying to move past over $60 billion in losses stemming from the subprime fallout and the credit crisis that ensued.
While Citigroup did have an exclusivity agreement with Wachovia that would forbid the bank from speaking to any other potential buyers, lawyers for Wachovia argue that the new $700 billion government bailout plan permits Wachovia to dabble in other offers.
“We are entitled as a matter of law to a judgment that Wachovia is permitted to go forward with Wells Fargo,” lawyers for Wachovia told the judge. “This is a matter of considerable urgency.”
Wachovia has stated they believe a deal with Wells Fargo would be in the interest of investors and shareholders since Wells Fargo does not need government assistance and was not hit nearly as hard by the mortgage crisis. While Citigroup’s bid included only the branches of Wachovia, Wells Fargo would be purchasing the entire company.
Judge Koeltl scheduled a hearing for October 7th, in which another judge will preside and determine the next course of action.
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. For more information, visit www.hedgeconetworks.com
Forbes – A federal judge in Florida ruled Wednesday that the head of two hedge funds deceived investors about the funds’ holdings. Elsewhere, federal regulators accused a California investment adviser of making tainted recommendations to clients.
In the Florida case, U.S. District Judge Kenneth Marra ruled that Michael Lauer, the head of Connecticut-based hedge funds Lancer Management Group and Lancer Management Group II, engaged in a fraud that cost investors about $500 million, according to the Securities and Exchange Commission.
Marra granted the SEC’s request for summary judgment against Lauer, finding that he overstated the hedge funds’ values from 1999 to 2002, manipulated the prices of seven securities that were an important part of the portfolios, and deceived investors about the funds’ holdings by providing them with fake financial statements.
Florida Times Union – CSX Corp.’s proxy fight with two hedge funds apparently ended Monday, after an appellate court turned down CSX’s attempt to block some of the funds’ votes for the company’s board of directors.
CSX, which had already seated two representatives of The Children’s Investment Fund Management LLP and 3G Capital Partners Ltd. on its board, said Monday it will now add two additional TCI and 3G nominees.
All four TCI-3G nominees won election to CSX’s 12-member board of directors at the company’s shareholders meeting in June. But after the votes were counted, CSX said it would only seat two of them until its court case was resolved.
On Monday, a three-judge panel of the U.S. Court of Appeals for the Second Circuit ruled against CSX, upholding a June decision by U.S. District Judge Lewis Kaplan. CSX had filed a lawsuit saying that TCI and 3G violated federal disclosure laws about their stock ownership in CSX. Kaplan agreed that the funds violated those laws, but said that did not give him the authority to block their proxy votes.
Boston Globe – A federal judge barred Samuel Israel, the convicted founder of hedge fund firm Bayou Group LLC, from entering a plea to bail jumping, saying his addiction to methadone may have impaired his judgment.
A US judge cited Bayou Group founder Samuel Israel’s methadone addiction and his ability to understand the proceedings.
Israel, who sought to plead guilty yesterday in US District Court in White Plains, N.Y., told US District Judge Kenneth Karas that his ability to understand the proceedings was "60 to 70 percent."
Prosecutors said the 49-year-old faked suicide and fled the day he was to begin a 20-year sentence for his conviction in a $400 million fraud.
"I have to be satisfied that you’re competent," Karas said, rejecting the plea to one count of failure to appear. "The fact that there is some doubt about that makes it imprudent to go forward today."
New York (HedgeCo.Net) – While the aftermath of the collapsed Bayou hedge fund may have left investors with nothing more than shock, the U.S. Marshals are trying to recoup some of the losses that were suffered. By selling Bayou’s failed investments, they are recovering some $115 million from the fund that once squandered over $300 million.
"You can’t believe some of the stupid investments these people made,” said Leonard Briskman, Deputy Chief for Business Management for the U.S. Marshals in an interview with Bloomberg. “The Bayou guys lost money during the late ’90s when almost everybody was making money in the market without even trying.”
Briskman is in charge of heading Bayou’s liquidation sale, in what has become a much more prominent role for the Marshals service with the rise of white collar crimes.
Investments aren’t the only thing being liquidated, however. U.S. District Judge Colleen McMahon ordered Israel to turn over his scooter and RV, the same vehicles that aided in his escape the day he was supposed to report to prison to start serving his 20 year sentence.
Also up for bid is the Tiffany & Co. watch that Israel was wearing. These things will help go towards the $150 million in restitution that he has been ordered to pay.
The U.S. Marshals Service is currently running a portfolio estimated at $1.7 billion that include 30 businesses.
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. For more information, visit www.hedgeconetworks.com
