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New York (HedgeCo.net) – Northern Trust has been named the Best Overall Hedge Fund Administrator by HFMWeek in the magazine’s inaugural U.S. Service Provider Awards. The awards recognize companies that have outperformed their peers during 2008-2009 and demonstrated financial progress, growth and genuine innovation.
“Northern Trust was recognized for the strength of its service offering and for demonstrating business momentum and product innovation during a challenging period for the hedge fund industry,” said Lucy Guest, senior publishing executive for HFMWeek.
“The importance of a Third Party Administrator is now being disseminated throughout the industry so that all funds, including start ups, are embracing the need for the service.” Joe Goldstein, Managing Partner at G&S Fund Services, said. “Prior to Madoff, start up and smaller funds were reluctant to use third party administrators even though we provided them with a higher quality of financial management at a lower cost.”
What Goldstein sees as a change in the industry is that the necessity of a hedge fund administrator is now understood by investors. “This change is contributing to the growth of the hedge fund administration business, as funds who were reluctant to use hedge fund administrators are now either turning over their financial administration to a third party, or at very least using them to review and confirm their NAV calculations.” Goldstein said.
Northern Trust has a growing hedge fund servicing business, with assets under administration of $75.5 billion as of June 30, 2009, an increase of 54 percent over the prior year. Northern Trust services nearly 300 hedge funds worldwide as of June 2009, and in the previous 12 months had provided global operations services to more than 120 new fund launches and transitions.
“We’re delighted to be recognized as best overall administrator as it validates our approach of blending innovative technology, strong process and automation with the exceptional service standards that set Northern Trust apart from our competitors,” said Matt Ward, Head of Fund Administration-North America for Northern Trust. “Ultimately this is a service business and our experienced and attentive people are the real strength of our offering.”
Reuters – Hedge fund Citadel Investment Group claims it is owed $470.5 million on derivatives contracts it held with Lehman Brothers, according to a claim filed in a New York bankruptcy court last week.
Citadel, which manages around $12 billion in assets, claims it is owed the money in its Citadel Equity Fund. The filing said the claim was at least partly based on a guarantee, but did not give details.
Reuters – Harvard University’s multibillion dollar endowment is adopting a strategy of selling off some holdings in hedge funds, private-equity firms and other money managers to bring more money under the control of internal investing staff over the next few years, the Wall Street Journal said.
Jane Mendillo, head of Harvard endowment, told the paper the university’s move would allow it to be more nimble, have better transparency into the portfolio and more liquidity.
Daily Telegraph – The funds collapsed as billions of dollars of bets made on mortgage-backed bonds and collateralised debt obligations (CDOs) unravelled, and when the time came to try to sell some of the funds’ sub-prime mortgages, no one wanted to buy them.
At the centre of those funds sat two men – hedge fund manager Ralph Cioffi and Matthew Tannin, the chief operating officer of Bear Stearns Asset Management (BSAM) – who were arrested a year later and charged with several counts of wire and securities fraud, following the loss of $1.4bn of investors’ money.
They face possible 20-year prison sentences, though both have consistently pleaded their innocence. The case against them will be set out at a trial slated to start in October. It centres on emails between the two – and with investors – in which both funds were referred to as "an awesome opportunity", despite allegations that both men knew of the problems within them.
Reuters – Eden Rock Structured Finance has seen its value drop further in 2009, leaving some investors saying they are worried they may get back little of their money in the hedge fund, which is due to be wound up after losses last year.
Lack of foreign exchange hedging pummelled the fund’s asset values by up to 8.5 percent in July, according to preliminary company estimates seen by Reuters.
Bloomberg ‘ Asia Genesis Asset Management Pte, whose Japan Macro Fund has outperformed peers, is closing down its two hedge funds and returning money to investors.
“I need some time to recuperate from weak health,” founder Chua Soon Hock, 50, said in an e-mailed reply to queries from Bloomberg News. “In past years, I have been doing 18-hour workdays with very active positions’ management to keep downside volatility of funds very low. I cannot do that with my current health conditions.”
The Singapore-based hedge-fund firm will return all money invested in the $761 million Japan Macro Fund and $12 million in the Asia Genesis Equity Fund to investors by mid-September, Chua said on Aug. 14.
Reuters – Kenneth Feinberg, the Obama administration’s pay czar, said on Sunday he has broad and "binding" authority over executive compensation, including the ability to "claw back" money already paid, and he is weighing how and whether to use that power.
Feinberg told Reuters that Citigroup Inc included the contract of energy trader Andrew Hall in submissions due Friday by seven major companies still locked in the federal government’s TARP Program.
Feinberg said he hasn’t looked at Hall’s contract, which reports have said could pay him as much as $100 million this year.
CBS News – Here’s a switch: a dozen hedge funds are accusing a California businessman of "playing dirty" with their money and even the name Sarah Palin is a "player" in the defendant’s prior ventures, according to the New York Daily News.
The suit alleges Milton Ault the 3rd stiffed the hedge funds out of their $4.2 million investment in Ault’s firm, Zealous Inc., by shoveling the money into porn, including a publicly traded gentleman’s club and a planned swingers ranch in New York’s Catskill Mountains, according to the paper.
Times Online – A group of banks that financed the £450 million leveraged buy-out (LBO) of car wash group IMO will take control of the struggling business leaving a rival group of hedge fund investors with nothing.
In a High Court decision that lawyers say will damage hedge funds’ interests in dozens of ailing private equity deals, a judge awarded 100 per cent of IMO’s equity to the banks, led by HBOS.
The hedge funds, which also lent money to back the 2006 buy-out, argued that they were entitled to some equity in the business, which is being restructured after defaulting on its debts in March.
New York Daily News – A California moneyman with X-rated interests is being sued by several hedge funds who accuse him of shoveling their millions into porn and a planned Catskills swingers ranch.
Milton (Todd) Ault 3rd is charged with stiffing a dozen hedge funds on a $4.2 million investment with his firm Zealous Inc.
The Manhattan Supreme Court suit says the money was supposed to be steered to an ”integrated global community of trading partners.”
Pittsburgh Post-Gazette – The family of a Cambria County manufacturer has filed a lawsuit claiming that a New York hedge-fund manager illegally took $750,000 from its trust fund.
The lawsuit, filed by the family of Frank Calandra Jr., was moved to federal court yesterday. It names as defendants Signature Bank Corp. and Cushner & Garvey LLP.
The man the family accuses of taking its money, Edward T. Stein, is not a named defendant.
Mr. Stein was charged with securities fraud in federal court in Manhattan in April. According to the Securities and Exchange Commission, Mr. Stein operated a Ponzi scheme involving some $55 million collected from investors.
Reuters – Hedge fund firm Citadel Investment Group will return millions to clients who asked to exit last year, but were locked in when its flagship funds lost more than half their value during the financial crisis.
The Chicago-based firm, which invests $12 billion, informed clients on Tuesday it plans to give back $250 million on October 1 and to make another distribution at the end of the year, according to an investor who asked not to be named.
Citadel last year was one of many hedge funds to block investor exits. Now its decision to return the money suggests the worst may be over for the $1.4 trillion hedge fund industry after it suffered its worst-ever losses and record outflows last year.
