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.
Bloomberg – If there’s anything tougher than being married to a hedge-fund guy, it’s being divorced from one. That’s the lesson of Jill Kargman’s new novel, “The Ex-Mrs. Hedgefund.”
Kargman specializes in the wealthy residents of Manhattan’s Upper East Side. In “Momzillas” and now “Mrs. Hedgefund,” she knows where the wealthy eat lunch (or used to, La Goulue is closing end of June) and where they hold chic fundraisers (the Puck Building in SoHo, for a little downtown frisson).
New York Times – A hedge fund executive has pleaded guilty to securities fraud and is cooperating with New York State Attorney General Andrew M. Cuomo’s investigation of corruption at the state pension fund, according to court records unsealed in Manhattan on Tuesday.
Barrett Wissman, a Dallas business associate of the Hunt family, is the first investment executive to be implicated in the inquiry and will pay $12 million over several years as part of a settlement under his felony plea, people with knowledge of the investigation said.
SmartBrief – Michael Berger, an Austrian banker accused of securities fraud, might go free without facing any charges, Vienna prosecutors said. Berger pleaded guilty to securities fraud in Manhattan, N.Y., in 2000 after the $400 million collapse of his hedge fund, but he became a fugitive in 2002 until his arrest in Austria in 2007.
Wall Street Journal – Prosecutors said $160 million is unaccounted for in a Ponzi scheme allegedly run by hedge-fund manager James Nicholson.
At a bail hearing Thursday, Assistant U.S. Attorney Maria E. Douvas said the government’s investigation showed that $293 million was invested with Mr. Nicholson, who was president and general partner of Westgate Capital Management LLC. Of that, $160 million is unaccounted for, Ms. Douvas said.
Prosecutors had alleged that Mr. Nicholson, of Saddle River, N.J., falsely represented to investors that the firm had assets under management ranging from $600 million to $900 million.
At Thursday’s hearing, U.S. Magistrate Judge Ronald L. Ellis in Manhattan didn’t change the bail conditions set for Mr. Nicholson — a $10 million personal recognition bond, with five co-signers and secured by three pieces of property. He also would be subject to home detention and electronic monitoring.
Bloomberg – Bret Grebow, co-founder of hedge fund HMC International LLC, was sentenced to four years in prison for defrauding investors out of $7.8 million in what prosecutors said was “a classic Ponzi scheme.”
Grebow, of Highland, Florida, was also ordered to forfeit $7.8 million after pleading guilty last year to investment adviser fraud. U.S. District Judge Barbara Jones in Manhattan imposed the sentence. Grebow, 33, faced a maximum prison sentence of five years.
“He was very remorseful,” defense attorney Vincent Gelardi said in an interview after today’s sentencing. “He was young at the time. He lost control of the situation.”
Newsday – A tough-talking President Barack Obama moved yesterday to block the $165 million in bonuses for American International Group executives that prompted a new wave of outrage at corporate America and taxpayer bailouts.
Despite the aggressive approach, it’s unclear whether he can get the payments back. But the White House said it would modify the terms of AIG’s pending $30-billion bailout installment to at least recoup the $165 million the bonuses represent. That wouldn’t rescind the bonuses, just require AIG to account for them differently.
Separately, state Attorney General Andrew Cuomo said he will subpoena the names of AIG officials involved and copies of their employment contracts to determine whether the bonuses are legal, given the firm’s weak finances.
Manhattan-based AIG was saved from insolvency by $170 billion in taxpayer-backed loans – and reported a $61.7-billion loss in the fourth quarter last year. It revealed on the weekend that it used more than $90 billion in its federal aid to pay out banks, some of which had received their own U.S. government bailouts.
Bloomberg – At the Art Show last year, dealer Richard L. Feigen offered an $8.5 million Pablo Picasso still life. This year, he’s highlighting less expensive art, including a $90,000 purple teapot painting by Georges Braque.
“The guys with the bonuses and hedge funds won’t be throwing money around,” he said. “There are a lot of things at lower price levels than in the past.”
The opening gala for the annual fair at the Park Avenue Armory in Manhattan proceeded last night without its sponsor, the bankrupt Lehman Brothers Holdings Inc., and with the expectation of fewer sales than last year.
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.
Bloomberg – Royal Bank of Canada, the country’s biggest bank by assets, was sued by investors in Olympus United Funds who claim they lost more than $90 million in the funds’ collapse.
Royal Bank, based in Toronto, “secretly managed” the funds, according to a complaint filed Jan. 23 in U.S. District Court in Manhattan. The funds’ parent company Norshield Financial Group filed for receivership in June 2005 amid probes by securities regulators.
“In its dealings and relationships with Norshield, Royal Bank of Canada assumed control of investments, exercised discretion in key areas and thus became liable for my clients’ losses,” Lee Squitieri, a lawyer for the investors, said in an interview.
Bloomberg – Royal Bank of Canada, the country’s biggest bank by assets, was sued by investors in Olympus United Funds who claim they lost more than $90 million in the funds’ collapse.
Royal Bank, based in Toronto, “secretly managed” the funds, according to a complaint filed Jan. 23 in U.S. District Court in Manhattan. The funds’ parent company Norshield Financial Group filed for receivership in June 2005 amid probes by securities regulators.
“In its dealings and relationships with Norshield, Royal Bank of Canada assumed control of investments, exercised discretion in key areas and thus became liable for my clients’ losses,” Lee Squitieri, a lawyer for the investors, said in an interview.
Lower Hudson Journal news – Four hedge funds are at the center of a federal class-action lawsuit accusing them of steering millions of dollars from investors to Bernard Madoff.
The lawsuit, filed in U.S. District Court in Manhattan, charges that Beacon Associates LLC I, Beacon Associates Management Corp., Beacon/Andover Group and Andover Associates LLC I were among a half-dozen companies that lost more than $15 million from investors by funnelling the money into Madoff’s failed brokerage firm.
New York Daily News – Disgraced Park Ave. lawyer Marc Dreier gave fellow scamsters $100,000 to impersonate others in calls to victims, Manhattan federal prosecutors said Tuesday.
The new details emerged at a bail hearing for former broker Kosta Kovachev, 57, arrested yesterday for allegedly helping Dreier try to steal some $100 million from hedge fund managers.
Prosecutors say Kovachev pretended to be a real estate developer’s controller in an October sitdown with hesitant hedge fund managers. Kovachev also impersonated the developer’s CEO in a conference call, prosecutors say.
