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.
Law.com – Goodwin Procter partner David B. Pitofsky was appointed Monday as receiver of the $1.7 billion Ascot fund put together by financier J. Ezra Merkin, almost all of which was invested with Bernard L. Madoff and lost.
Justice Richard B. Lowe appointed Pitofsky receiver in a lawsuit (People of the State of New York v. Merkin, 450879/09) brought by the New York attorney general’s office seeking recovery from Merkin of $2.4 billion in his client’s funds which he had "recklessly" invested with Madoff despite "clear warning signals" that the funds were being mishandled.
Wealth Bulletin – Geneva’s public prosecutor said he has launched a criminal investigation into allegations that Banco Santander SA’s hedge-fund unit misled investors when it funneled their money into Bernard L. Madoff’s Ponzi scheme.
The formal investigation was opened following a complaint by Geneva Partners, an independent investment fund that bought financial products from Santander’s Geneva-based hedge-fund unit, Optimal Investment Services SA.
Dario Zanni, Geneva’s public prosecutor, said the inquiry would look at whether Optimal’s former chief executive, Manuel Echeverria, did the fact-finding claimed in the firm’s documents. "We have some suspicion about his [work]," Mr. Zanni said. "We are not sure he was doing his job compliant with his duties."
Boston Globe – The trustee in the bankruptcy case of swindler Bernard L. Madoff has told a hedge fund business owned by Massachusetts Mutual Life Insurance Co. to return money that it received from Madoff over the past six years.
Responding to a Boston Globe inquiry, bankruptcy trustee Irving Picard confirmed that he had sent a so-called clawback letter to Tremont Group Holdings Inc.
Tremont is among more than 225 former Madoff investors who have received such letters from Picard, on the grounds that the money belonged to other investors, because Madoff never generated any real investment profits. Picard wants to recoup the disbursed funds to have more money to repay investors for their losses. He has threatened to sue anyone who doesn’t return the funds.
Boston Globe – Secretary of State William F. Galvin is investigating Massachusetts Mutual Life Insurance Co.’s relationship with a hedge fund operation that lost $3.3 billion to admitted swindler Bernard L. Madoff.
Galvin, who oversees the state Securities Division, said his office is looking into MassMutual as part of an ongoing probe of investment firms that placed clients’ funds with Madoff. The division is examining whether MassMutual did enough to safeguard its customers’ money.
Springfield-based MassMutual owns Tremont Advisers Inc., a Rye, N.Y., hedge fund firm that sustained the second-biggest loss of all the confessed swindler’s clients.
Reuters – Nicola Horlick’s boutique fund manager Bramdean Alternatives said on Thursday it has received an approach for a possible takeover by an unnamed bidder.
The manager said in a statement: "The Board announces that it has received an approach which may or may not lead to an offer being made for the entire issued share capital of the Company."
At the end of last year Bramdean, headed by well-known fund manager Horlick, said it had an exposure to Bernard L. Madoff Investment Securities representing 9.5 percent of its net asset value at the end of October.
Gainesville Sun – As Bernard L. Madoff waits in jail to be sentenced, legal problems are accumulating for some of the hedge fund managers who helped him raise billions of dollars from around the world for what he now admits was a vast Ponzi scheme.
Massachusetts regulators have sued the Fairfield Greenwich Group, one of the earliest of these so-called feeder fund managers, for fraud, saying it had repeatedly misled investors about how diligently it checked out Mr. Madoff’s operations over the years.
Boston Globe – The Massachusetts state pension fund fired two money managers yesterday for poor performance, including one that had lost $12 million investing with accused swindler Bernard L. Madoff.
Austin Capital Management, which had managed $170 million in state retirement funds, was fired after it lost $40 million, including the money invested with Madoff and $28 million from market declines. The state withdrew its remaining $130 million from Austin, which runs a "fund of funds," a middleman that takes investors’ capital and spreads it among other money managers, including hedge funds.
Al-Bawaba – Never before in its short history was the hedge funds community confronted with the challenges nor the pressures it is facing today, following a six-year boom,with Madoff’s scandal coming as the icing on the cake following the US financial crisis.
With investors already becoming more demanding with regards to fees, transparency and regulation, these and other industry standards are expected to become topics of contention within this once powerful industry globally and in the region. Investors, regulators and hedge fund managers are expected to have compelling debates on all these issues at the 10th Hedge Funds World Middle East Conference taking place this year from 10 to 12 March 2009 at Madinat Jumeirah in Dubai.
The Washington Times – Hedge-fund managers say Bernard L. Madoff may succeed where Christopher Cox failed: forcing regulation of their $1.5 trillion industry.
Mr. Madoff’s purported bilking of investors by up to $50 billion begins to uncover a part of the investment industry that has skirted government scrutiny. Although the 70-year-old was registered with the U.S. Securities and Exchange Commission, the agency Mr. Cox heads, fund executives who fed him customers’ money weren’t.
"This is an Enron moment for hedge funds," said Peter Rup, chief investment officer at New York-based hedge fund Orion Capital Management LLC, with $400 million in assets under management. "Regulation would be welcome, primarily from a trust standpoint."
Globe Gazette – Kevin Bacon and wife Kyra Sedgwick are among the many victims of the massive Ponzi scheme run by the disgraced New York money manager.
Bacon’s publicist, Allen Eichhorn, confirmed Tuesday that the couple had investments with Madoff. He wouldn’t say how much money Bacon, whose most recent film is “Frost/Nixon,” and “The Closer” star Sedgwick might have lost.
Madoff told federal investigators that his investment business was “a lie” that lost as much as $50 billion.
Other Hollywood victims have included a charity linked to director Steven Spielberg and his DreamWorks partner Jeffrey Katzenberg, and screenwriter Eric Roth, whose credits include “Forrest Gump” and “The Curious Case of Benjamin Button.”
