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 Times Blogs – The compulsory registration of hedge fund managers was backed by a global regulatory body on Monday in an effort to restore investor confidence.
The International Organization of Securities Commissions, representing regulators from more than 100 countries, said the $1.3 trillion hedge fund sector did not cause the credit crunch but may have amplified its effects.
IOSCO’s final six principles flesh out a statement made in March, and a pledge from the G20 group of industrialized and emerging market countries in April, that all hedge fund managers should be registered and directly supervised, Reuters reported. Those principles include mandatory registration of hedge fund managers while prime brokers who provide funding to hedge funds should also be subject to mandatory registration and supervision.
The European Union has also put forward a draft law that goes further than IOSCO, while the U.S. is also planning mandatory registration of hedge funds but so far in a less extensive way than the EU.
New York Times – The managing director of a collapsed Chicago hedge fund, Lake Shore Asset Management, was indicted by a federal grand jury. Prosecutors say the director, Philip J. Baker, operated a $300 million fraud.
The 27-count indictment was unsealed on Monday, said Patrick J. Fitzgerald, a United States attorney, in a statement on Tuesday. An arrest warrant has been issued for Mr. Baker, but his whereabouts are unknown, Mr. Fitzgerald said.
The Commodity Futures Trading Commission accused Mr. Baker in a civil lawsuit last year of having defrauded at least 700 investors by hiding trading losses. The commission won court orders banning Lake Shore from commodities trading.
Mr. Baker said that Lake Shore had a long history of trading success, though it lost about $38 million from 2002 to 2007, according to the indictment.
Wealth Bulletin – The Managed Funds Association, a leading trade group for the hedge fund sector, has recruited Brownstein Hyatt Farber Schreck, the heavyweight K Street lobbying firm, to press its interests on Capitol Hill, a document filed this week with the Senate Office of Public Records showed, according to a report in The New York Times.
New York Times Blogs – E*Trade Financial is in talks with Citadel Investment Group, the hedge fund that is its largest shareholder, about a deal to shore up the struggling brokerage firm’s balance sheet, The Wall Street Journal reported, citing people familiar with the matter.
The two companies have been in negotiations for weeks to find a solution to E*Trade’s financial problems, The Journal said, adding that terms of the deal were unknown.
On Tuesday, E*Trade announced that Citadel Chief Executive Kenneth C. Griffin would be joining the firm’s finance and risk-oversight committee.
New York Times – In mid-March, with the global stock markets plunging, Philippe Jabre, a hedge fund manager based in Geneva, started buying bombed out financial stocks in the United States, Europe and Asia.
A procession of sleepless nights followed as he wondered whether his bets would pan out, or send his nascent $2.5 billion fund outfit reeling.
Now, with his main fund up 30 percent this year, rest comes a little more easily.
New York Times – The Ponzi scheme’s victims denounce him as cold-hearted, dishonest and just plain wrong
No, they are not describing Bernard L. Madoff, the author of the fraud that has ruined their lives. They are criticizing Irving H. Picard, the New York lawyer and trustee who has been appointed to represent their interests in the tangled scandal.
As claims flow in from thousands of victims, Mr. Picard and his legal team are quietly making life-shaping decisions every day. They decide who will be paid quickly, who will be paid eventually, who will not be paid at all and who will be asked to pay back money they got years ago.
New York Times – In the rarefied world of hedge funds, he is one of the greats — a stock-picker who managed to make money, bull market or bear, for more than two decades.
But on Wednesday, Arthur J. Samberg told his investors that his long, successful run was over. Mr. Samberg, 68, said he had reached a “painful conclusion” to wind down his $3 billion investment firm, Pequot Capital Management, because a long-simmering investigation into insider trading at the fund was heating up once again.
New York Times Blogs – John Paulson, the hedge fund manager who reaped a windfall betting against the U.S. housing market before the credit crunch, is now hoping to ride to riches on the property industry’s recovery, The Telegraph reported.
Mr. Paulson’s firm, Paulson & Company, is in the early stages of raising money for a new private equity fund, Paulson Real Estate Recovery Fund, the newspaper said.
New York Times – Two weeks from now, a seven-year-old hedge fund called Alson Capital Partners will return around $800 million to its investors, and shut its doors for good.
The fund was founded and managed by Neil Barsky, 51, a former Wall Street Journal reporter-turned-Morgan Stanley analyst, who started his first hedge fund in 1998, just as the “hedge fund decade” was gaining steam. He was an old-fashioned stock picker who ran Alson Capital as a classic “long-short” stock fund, meaning that he bought companies he thought had good long-term prospects, while shorting companies he thought were likely to fall off the cliff. At its peak, Alson Capital had $3.5 billion under management, charged a 1.5 percent management fee, took 20 percent of the profits, and, when you include Mr. Barsky’s predecessor fund, produced compounded annualized returns of 12.11 percent a year. It’s fair to say he’s made a pretty penny.
PerthNow – Mr Geffen tried to acquire a 19 per cent stake in the New York Times Company that was held by Harbinger Capital Partners, the activist hedge fund, but was rebuffed, it emerged overnight.
Since 1896, the newspaper has been controlled by the Ochs-Sulzberger family, whose members maintain their grip with a separate class of super-voting shares.
However, the dominance of the family, headed by Arthur Sulzberger, has come under pressure as advertising has collapsed and losses have mounted, which have led to speculation that The New York Times may be sold.
Reuters – Media mogul David Geffen tried to buy a stake in the New York Times Co from hedge fund Harbinger Capital Partners, but was rejected, a source with knowledge of the matter said on Monday.
Geffen offered to buy the stake at market price, but Harbinger fund manager Phillip Falcone wanted him to pay a premium, according to the source.
New York Times Blogs – The biggest regulatory changes since the 1930s are bearing down on the U.S. securities and investment industry, and many firms are ill-prepared, according to a new study by research firm TowerGroup.
From derivatives and hedge funds to capital standards and short selling, the range of issues “encompasses almost every line of business and every functional area,” TowerGroup senior research director Dushyant Shahrawat told Reuters.
Business models will adapt or perish in the new order, which regulators aim to make more transparent, accountable and globally consistent, according to the report released on Thursday.
