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Reuters – Suspected insider trading cases reached an all-time high last year, driven less by hedge funds and more by pillow talk between relatives and friends, the head of surveillance at the New York Stock Exchange said on Wednesday.
In a year when bombshell revelations rocked bank stocks, governments outlawed short-selling, and panicked investors brought on the worst market rout since the 1930s, there was much to tempt those with privileged information.
NYSE Regulation, the Big Board’s oversight body, referred 146 cases of suspected insider trading to the U.S. Securities and Exchange Commission in 2008, five more than in 2007, the previous record year, and more than twice as many as in 2004.
Mena Report – The Dubai Multi Commodities Centre Authority (DMCCA) and Shariah Capital, Inc. (SCAP.L) today announced the Dubai Shariah Hedge Fund Index, the first internationally-recognised index comprised exclusively of Shariah compliant hedge funds. The Dubai Shariah Hedge Fund Index will be calculated and reported by Thomson Reuters (NYSE:TRI), the global news and financial information organisation.
The Index reflects the performance of the DSAM Kauthar Commodity Fund, Ltd. (“DKCF”). DKCF is an equally-weighted fund-of-funds comprised initially of four single- strategy, commodity-focused funds that invest exclusively in Shariah compliant long/short equity hedge funds on the Al Safi Trust platform. The Al Safi Trust is a comprehensive Shariah compliant platform designed specifically for hedge funds and launched recently by Barclays Capital and Shariah Capital. Distributed under the DSAM Kauthar label, the four funds underlying the index have been seeded with US$50 million each by DMCCA.
Bloomberg – Hedge-fund assets may fall to about $1 trillion by the middle of next year, a decline of almost 50 percent from their peak in June, because of market losses and client withdrawals, Citigroup Inc. said in a report.
Managers are likely to see investors, led by funds of funds, pull 20 percent of their money, Tobias Levkovich, an analyst at the New York-based bank, wrote yesterday. Funds of funds are middlemen who select hedge funds for their clients.
“The so-called `Swiss hot money’ wants out and funds are responding,” Levkovich wrote, referring to Swiss investors who have a shorter investing period than pension funds. “Citi’s credit analysts estimate that hedge funds have raised cash to roughly 40% of assets already in anticipation of known redemptions and possibly unanticipated demands from investors.”
Hedge funds lost an average of 16 percent this year through October, according to data compiled by Hedge Fund Research Inc., as stock and commodity markets tumbled and lending tightened. The industry has lost money in only one year — a 1.45 percent decline in 2002 — since the Chicago-based firm began tracking returns in 1990.
Bloomberg – The Australian and New Zealand dollars rose as Australian stocks advanced on anticipation interest-rate cuts worldwide will bolster global economic growth.
The currencies advanced against the yen as Australia’s S&P/ASX 200 Index gained for the fourth day, its longest winning streak since Aug. 12. Economists forecast the Reserve Bank of Australia will reduce its benchmark rate to 5.5 percent tomorrow after house prices fell in the third quarter and manufacturing contracted at a record pace in October.
“The Aussie dollar has been following equity markets quite closely on global risk sentiment,” said Jim Vrondas, manager of corporate business at online foreign-exchange dealer OzForex Ltd. in Sydney. “If other Asian equity markets rally we might see a bit of late Asian, early European buying of the Aussie.”
New York Post – The Securities and Exchange Commission met last night in emergency session to consider requiring hedge funds to disclose their short positions and institutional traders to secure their records in anticipation of subpoenas.
Under the proposals, managers with more than $100 million invested in securities would have to issue reports of their daily short positions.
The meeting came after the SEC adopted two regulations that go into effect today that will force traders and brokers to actually borrow shares used in all short sales, amid concern that so-called "naked short sales" are driving down prices by flooding markets with sell orders.
West Palm Beach (HedgeCo.net) – New investments in hedge funds for the first six months of 2008 was below $30 billion, according to Hedge Fund Research, way below the $118 billion raised for the same period the year before, making 2008 is the worst year on record for the industry as the average hedge fund dropped off more than 4%.
According to research, the unexpected downturn will lead investors to rethink their investments or ask fund managers to lower their fees from the current rate of 2% and reduce their 20& cut on profits. Problems at hedge funds may also invite a government probe.
Dan McAllister, treasurer and tax collector of San Diego County, attributed the hedge fund’s popularity to it being seen as a panacea and a sure way to earn big money fast. "But maybe it’s time to be a little cautious, and it’s time to look at things with a more discreet eye," McAllister told the New York Times.
In anticipation of harder times ahead, fund managers are cutting employee Christmas bonuses, said a study slated to be released this week by Glocap, a hedge fund recruitment company. Recruiting firms like Heidrick and Struggle are maintaining a watch list of problematic hedge funds. Tim Holt, a partner in Heidrick who supervises the company’s Wall Street recruitment task, has 100 hedge funds on its watch list and expects 50 to 80 to be added in the next few months.
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Bizjournals.com- CSX Corp. and the activist hedge funds engaged in a proxy contest with the railroad will make their cases to gain the recommendation of a company many institutional investors rely on when casting shareholder votes.
RiskMetrics Group, a proxy advisory company, will hold a special governance forum at 11 a.m. June 9 in anticipation of CSX’s annual meeting June 25 in New Orleans. The forum, to be webcast, will involve representatives of CSX (NYSE: CSX) and hedge funds The Children’s Investment Fund Management LLP and 3G Capital Partners Ltd.
The hedge funds have teamed to nominate five people to CSX’s 12-member board and make several shareholder proposals.
