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.
New York (HedgeCo.Net) – Halliburton and KBR, Inc. have settled with the Securities and Exchange Commission after allegations that KBR subsidiary Kellogg Brown & Root illegally obtained construction contracts in Nigeria by bribing government officials.
KBR and Halliburton will pay $177 to settle the charges brought on by the SEC. In addition, Kellogg Brown & Root has pled guilty to criminal charges brought forth by the U.S. Department of Justice. Those charges include one count of conspiring to violate the Foreign Corrupt Practices Act and four counts of violating the anti-bribery provisions of the FCPA. Kellogg Brown & Root has agreed to pay $402 million to settle these charges in addition to succumbing to stricter oversight.
"Today’s guilty plea by KBR ends one chapter in the Department’s long-running investigation of corruption in the award of $6 billion in construction contracts in Nigeria,” said Assistant Attorney General Rita M. Glavin of the Department of Justice. “This bribery scheme involved both senior foreign government officials and KBR corporate executives who took actions to insulate themselves from the reach of U.S. law enforcement.”
The complaint alleged that Halliburton, who was the parent company of KBR at the time, failed to detect or prevent the bribes. The KBR companies reportedly set up fake contracts with agents in the United Kingdom and Japan to launder the money to the Nigerian officials, after deciding it was necessary to use bribery in 1994. The payoffs took place for the next 10 years. Halliburton failed to perform adequate due diligence on the false agents, and as a result, their records contained false information about the payments.
Total bribes to Nigerian officials totaled $180 million. Albert “Jack” Stanley, one-time KBR CEO under former Halliburton head Dick Cheney, pleaded guilty to bribery charges in September after it was discovered he met with high-ranking Nigerian officials at least four times to make payments in exchange for the construction contracts. Stanley faces seven years in prison and fines totaling almost $11 million.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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New York (HedgeCo.Net) – William Ackman, who runs hedge fund Pershing Square Capital Management, is letting clients withdraw as much of their investment as they please. A vast change from the dozens of hedge funds who rushed to halt redemptions, Ackman is personally stepping up to the plate, apologizing profusely for one of his fund’s performance and allowing investors to reclaim their cash.
Pershing Square IV, the fund started by Ackman two years ago, was supposed to reap returns by betting that the stock of Target Corporation would rise sharply. Instead, share prices at the discount retailer have done just the opposite, causing the fund to plunge 90 percent this year.
Ackman sent a letter to investors, describing his fund as “one of the greatest disappointments of my career to date.” He also personally threw in $25 million to help pay back frustrated investors. For those who wish to withdrawal what is left of their investment, they will be paid in March. For clients who invest in his other hedge funds, Ackman has declared that he will not charge a performance fee until the current losses are recouped.
While Ackman’s actions are no doubt admirable, many hedge funds are choosing to go the other route; forcing investors to stay locked in until unfavorable market conditions pass. Hedge funds like RAB Capital, Citadel and Fortress have all imposed restrictions on withdrawals following losses. Some are hoping that Ackman’s moves will start a new trend; one where investors can rightfully take what’s there’s, in addition to taking the fall for disappointing investments by forgoing their standard fees.
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. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com
New York (HedgeCo.Net) – Wachovia customers who invested in auction rate securities prior to their collapse will most likely get their money back. The SEC announced a settlement yesterday with Wachovia Securities that will provide $7 billion in liquidity to those clients, which resolves the agency’s original charges that the bank misled investors about the risks associated with ARS.
"The goal of the SEC in these matters was to return as much liquidity to investors as quickly as possible, while at the same time avoiding further disruption in the financial markets. Today’s final settlement with Wachovia represents substantial progress toward fulfilling that goal,” said Linda Chatman Thomsen, Director of the SEC’s Division of Enforcement.
The original SEC complaint alleged that Wachovia peddled ARS to clients, while representing them as safe, highly liquid investments, much like cash or money market instruments. In addition, the agency charges that the bank became aware of the mounting risks associated with these investments, yet continued to market them as safe. When the ARS market plummeted, thousands of clients were left with billions of dollars of illiquid investments.
"Wachovia did not ensure that its sales force understood the ARS products it was selling. As a result, Wachovia’s customers were not adequately informed of the nature and risks associated with ARS and were caught holding illiquid securities when the ARS market froze," explained Merri Jo Gillette, Director of the SEC’s Chicago Regional Office.
The settlement has several facets, including buying back ARS from investors who purchased them on or before February 13, 2008. For more information on the matter, or for buyback eligibility, the SEC suggests you contact Wachovia directly at 1-866-283-7943.
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. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com
New York (HedgeCo.Net) – As the Obama administration prepares to distribute the remaining $350 billion in the Troubled Asset Relief Program, a new requirement will ensure that the salaries of top executives be capped at $500,000 a year.
“For top executives to award themselves these kinds of compensation packages in the midst of this economic crisis is not only in bad taste, it’s a bad strategy, and I will not tolerate it as president,” Obama said at a White House press conference.
While last year saw a handful of top financial organizations crumble amidst record write downs and unsustainable losses, companies continued to dole out bonuses to those in high positions. Even as the first half of the TARP funds were distributed by the Bush administration, the public demanded transparency for fear that taxpayer money was being used to pad the paychecks of the ultra wealthy; the individuals whose greed was no doubt responsible for the financial meltdown in the first place. It was estimated that the banks receiving bailouts paid their top officials $1.6 billion in salaries and bonuses last year, according to the Associated Press.
Merrill Lynch CEO John Thain took home a record $83 million in 2008, despite taking $10 billion of taxpayer-funded government aid to keep his company afloat. Lloyd Blankfein, CEO of Goldman Sachs, pocketed $54 million while the company shelled out $242 million to their top five execs. Jamie Dimon of JPMorgan Chase, on the other hand, pocketed a mere $1 million while forgoing any bonus.
Treasury Secretary Tim Geithner was also on board with the new plan, saying that our economic woes were “made worse by a loss in faith,” referring to the gluttony of these top execs. While the plan cannot retroactively take back bonuses that were awarded with the first half of the TARP funds, provisions will likely be set in place that can reclaim compensation from senior executives if they are discovered engaging in any fraudulent practices.
In addition to outlining the plan, Obama urged Congress to finalize the economic stimulus legislation, saying that any delays “will turn crisis into a catastrophe and guarantee a longer recession.”
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. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com
New York (HedgeCo.Net) – Daniel Och, CEO of New York-based hedge fund Och-Ziff Capital Management, is showing his confidence in his company, racking up another 1.6 million shares.
Och shelled out about $7 million between November 13 and February 2, at prices ranging from $3.89 to $4.98 a share according to the most recent filing with the Securities and Exchange Commission.
Och-Ziff, who is one of just a few hedge funds that is traded on the market, went public in November 2007, with their IPO going for $32 a share. The financial turmoil of 2008 caused their stock prices to plummet 80 percent as their hedge funds posted record losses.
However, gains in January have investors talking about a comeback. The company’s OZ Master Fund posted returns of 3.12 percent while their other three hedge funds also enjoyed positive returns.
Och-Ziff regularly files performance reports with the U.S. SEC because they are a publically traded company. Most hedge funds are not required to do so. However, a recent push for greater transparency in the troubled industry has caused many individuals in Washington to act. If a proposed plan brought on by two U.S. Senators gets approved, all hedge funds will be required to register with the SEC.
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. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com
New York (HedgeCo.Net) – After a year when most hedge funds grudgingly reported month after month of losses, Och-Ziff Capital Management was happy to showcase their gains for January in a recent regulatory filing.
The New York-based hedge fund reported positive returns for all four of their funds, sending share prices up and giving investors a jolt of confidence.
The OZ Master Fund saw gains of 3.12 percent while the Asia Master Fund returned 2.49 percent. Also following suit was the Europe Master Fund, which rose 1.05 percent and the Global Special Investments Master Fund which posted returns of 0.84 percent.
Another positive note was the rise in assets under management. Och-Ziff, who once managed nearly $34 billion, took a large hit last year along with many hedge funds. With the economic turmoil and investors pulling out approximately $5 billion in a rush for redemptions, assets under management fell to just over $21 billion in late 2008. According to the filing, that number is steadily climbing, up to $22.3 billion.
Och-Ziff, who unlike most hedge funds is a publically traded company, saw their share prices rally amidst the news. Shares closed yesterday at $5.31, up 3.91 percent.
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. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com
