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 – Asian hedge funds will attract a “wave” of new money that could more than double the industry’s assets from its peak of $250 billion as the region leads the world’s emergence from the deepest recession since World War II, according to GFIA Pte.
The industry in Asia will grow to two-to-three times its peak within the next five years as investors outside the region with little or no investments in Asian alternative strategies allocate to the funds, said Peter Douglas, principal of GFIA, a Singapore-based hedge-fund consulting firm. The industry has shrunk by about 30 percent from the peak reached in the first half of 2008 following client withdrawals, he said.
Reuters UK – Lansdowne Partners, one of the country’s largest hedge fund managers, has stopped accepting investments in its flagship fund with several other big funds set to follow suit, according to the Financial Times.
It said the 4.9 million pound Lansdowne UK equities fund, which is up around 18 percent so far this year, was no longer accepting new money after more than $1.2 billion (728 million pounds) was withdrawn in record redemptions.
Stuff – Hedge funds are living up to their high-flying reputation again with strong returns in the last three months, but many investors burned by last year’s losses are clamoring for reforms before committing new money.
Final June quarter data will not be released until next week, but Merrill Lynch analysts who track returns in the $1.3 trillion industry wrote on Monday that hedge funds will likely post their best quarterly performance since early 2000.
Reuters India – Hedge funds are living up to their high-flying reputation again with strong returns in the last three months, but many investors burned by last year’s losses are clamoring for reforms before committing new money.
Final June quarter data will not be released until next week, but Merrill Lynch analysts who track returns in the $1.3 trillion industry wrote on Monday that hedge funds will likely post their best quarterly performance since early 2000.
Financial Standard – US-based hedge fund BlueMountain Capital Management hopes its forecast 20 per cent plus returns, lower fees and new liquidity rules will appeal to local super funds allocating new money into alternative strategies.
Hedge funds are a hard sell these days following the sector’s nightmare run in the past two years. But if there is a silver lining to the market carnage, it is that the hedge funds that did survive adopted their business model to a new norm.
New York (HedgeCo.Net) – Hedge fund manager Ray M. White and his company, CRW Management, LP, have been charged today by the Commodity Futures Trading Commission of swindling at least $10.9 million from over 250 investors through an alleged Ponzi scheme.
The complaint alleges that the Mansfield, Texas-based White, told investors their funds would be traded in the forex market and the strategy would reap returns of up to 416 percent annually.
Instead, White and CRW pocketed millions of dollars to fund a rampant spending spree which included homes, cars, Dallas Stars season tickets and the sponsorship of a drag racing team.
Out of the $10.9 million in initial capital they received, White and CRW used only $94,000 for forex trades. Ponzi schemes cease to work when new money coming in dries up; preventing the manager from paying back "returns" to anymore existing investors.
Christopher White and Hurricane Motorsports, LLC are also named by the CFTC as recipients of a portion of these funds in which they are not entitled to.
In the U.S. District Court for the Northern District of Texas, Judge Ed Kinkeade set the next hearing for March 11, while freezing assets and permitting the CFTC to seize records.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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New York (HedgeCo.Net) – Marvin Cooper, who allegedly swindled deaf investors through his money management firm-turned Ponzi scheme, is maintaining his innocence despite new evidence uncovered Monday in federal court.
"Nobody’s been defrauded," Cooper’s attorney, Michael Glenn told the Honolulu Advisor. "We’re working on an amicable settlement in which the investors will get all their assets back."
According to papers filed by federal lawyers, Cooper, who ran Hawaii-based Billion Coupons Inc., may have been planning to hightail it to Panama after attempting to borrow $534,187 by putting his Kaimuki home up as collateral for a mortgage loan. Authorities believe the property was purchased with client funds.
Barry Fisher, the outside receiver appointed to take control of Cooper’s company by U.S. District Judge Michael Seabright, came to this conclusion after conducting a preliminary review of the business. Fisher also found an $80,000 check signed by Cooper which was to be used as a down payment for an $800,000 home in Panama, along with emails discussing his pending move.
Cooper, who is deaf, was charged last month by the Securities and Exchange Commission after allegedly raising $4.4 million by targeting investors in the U.S. and Japan Deaf communities. He then used about $1.4 million of those funds to purchase a new home and other personal expenses.
To gain the trust of investors, Cooper promised substantial returns from investments in Forex markets. Out of the millions, only $800,000 was actually used for Forex trading, with losses exceeding $750,000 from those trades. In typical Ponzi scheme fashion, new money coming in was then used to pay existing investors to keep up the appearance of steady returns. Cooper and BCI also have been hit with fraud charges brought on by the Commodity Futures Trading Commission.
"Being deaf and without the credentials required by the SEC and state regulators, Mr. Cooper focused on gaining access to deaf investors through feeder referrals, which were provided by other Deaf individuals with no investment background in exchange for a referral fee,” explains Joshua R. Beal, Managing Partner at investment advisor firm Schwarz Financial Services LLC. “He followed up with personal visits and calls over the video-phone where he promised returns of 15-25% a month based on automated computer trading programs."
Cooper approached Beal with a call over the videophone in 2007 when he was looking for advice regarding his investment firm. Beal suggested that he should register with the Securities and Exchange Commission; a piece of advice Cooper chose to ignore.
“In 2007 and 2008, several deaf clients of mine along with some community members started telling me that they were having success with Marvin,” Beal recalls. “I contacted the State of Hawaii and the SEC because he did not require a social security number, nor did he employ a custodian or provide a fee statement for his clients.”
Although in most Ponzi schemes, investors rarely receive their money back, authorities are confident that clients will receive some or all of their original investment back, after the assets are liquidated.
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) – The SEC has located and halted a Ponzi scheme targeted primarily at deaf individuals in the United States and Japan.
According to the complaint, Hawaii-based Billion Coupons, Inc. along with its CEO Marvin R. Cooper was able to raise $4.4 million from 125 investors by holding seminars at Deaf community centers.
Cooper allegedly promised investors that their cash would be invested in Forex markets and returns would be in the 25 percent range. In reality, Cooper only invested $800,000 in Forex markets and lost over $750,000 from those trades.
When they couldn’t make their promised returns, they started the Ponzi scheme, where new money coming in is used to pay off older investors. The SEC alleges that Cooper misappropriated at least $1.4 million of those funds to purchase a new home and other personal belongings. The scam has been running since at least September 2007.
"A Ponzi scheme targeting members of the Deaf community is particularly reprehensible," said Rosalind R. Tyson, Regional Director of the SEC’s Los Angeles Regional Office.
The assets of BCI and Cooper have been frozen and a temporary receiver has been appointed. In addition to the SEC charges, the Commodity Futures Trading Commission filed an emergency action yesterday against the two, for violations of the antifraud provisions of the Commodity Exchange Act.
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
Bloomberg – Australian hedge funds will attract a net inflow of cash in 2009 after record redemptions by overseas investors led to the closure of at least 10 funds in the fourth quarter, the local arm of the Alternative Investment Management Association said.
Funds that survived will see some of that money invested in March once December quarter redemptions are returned to investors, AIMA Australia Chairman Kim Ivey said in an interview.
“Getting through this period is the defining time for managers because new money in March and April may keep them afloat,” said Sydney-based Ivey, who is also managing director of private hedge fund Vertex Capital Management. “Those that came out of 2008 and showed that they could still add value are in a very good position in 2009.”
New York (HedgeCo.Net) – Nicholas Cosmo, head of New York-based Agape World Inc., has been arrested for allegedly running a $400 million Ponzi scheme. His company, which marketed commercial bridge loans, was not registered with the U.S. Securities and Exchange Commission.
“Some of the early investors made money but as this scheme started to crumble, the later investors did not see a penny,” said one law enforcement official, referring to the classic Ponzi scheme, where new money coming in is used to pay off earlier investors.
Agape World Inc. had bragged to clients that they posted consistent returns of around 14 percent. Had investors performed a due diligence on Cosmo, they would’ve found that he was convicted in 1999 of fraud and sentenced to 21 months in prison.
Agape World Inc. was essentially aiming to be an asset based lender. They supposedly provided project loans on construction, acquisition loans and provided financing for unfinished properties.
The trouble in the markets lately has highlighted the immense presence of Ponzi schemes all around the country. Even after the $50 billion Madoff debacle, a handful of Ponzi schemes and fraudsters have floated to the surface. Arthur Nadel of Sarasota, Florida, disappeared along with his client’s $350 million in cash. Shortly after, Michael Riolo of Boca Raton was targeted, accused of bilking $50 billion out of investors.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
Reuters – Hedge funds should be wary of being pressured into cutting fees because of poor performance numbers during the financial crisis, a director at fund research company Lipper FMI said on Thursday.
Speaking at a briefing on trends for the fund management industry, director of fiduciary operations Ed Moisson said the industry was seeing much discussion around a potential overhaul of the standard ‘2 and 20′ structure.
Hedge funds have traditionally charged a 2 percent management fee and a 20 percent performance fee on investments in their funds.
Bloomberg – JO Hambro Capital Management Ltd., which oversees about $3.5 billion of assets, will close one of its two hedge funds partly because a bet against Volkswagen AG shares backfired, people familiar with the situation said.
The $240 million Trident European Fund dropped 25 percent in October, its worst month since starting a decade ago, mainly after a bet on a drop in Volkswagen shares went awry, said the people, who declined to be identified because the firm doesn’t disclose returns. The fund has slumped 39 percent this year after posting average returns of 8.4 percent annually since its inception.
Poor performance, dollar gains sapping European investment returns and investors moving assets from medium-sized companies all contributed to the fund’s closure, Suzy Neubert, a spokeswoman for JO Hambro in London, said in an e-mailed statement.
