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) – 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) – Connecticut has long been a haven for the hedge fund industry; where light regulation and a dense population of ultra wealthy investors lure the most talented of hedge fund managers. But if some state lawmakers have their way, hedge funds will have to jump through a lot more hoops than they are used to, according to the Hartford Business Journal.
Under current law, hedge funds only allow accredited investors who have a net worth of $1 million or higher to participate. The proposed legislation would bump that minimum requirement up to $2.5 million, with institutions needing at least $5 million in assets.
The new legislation would also require hedge funds to provide greater transparency by disclosing their fees and other information about management or investment strategy. Hedge funds would also be required to obtain a state license as well as have an independent annual financial audit performed.
Many fear that by imposing these guidelines, Connecticut would have less of a draw, and many hedge fund managers could simply pack up and move to nearby metropolises like New York or Boston.
The pull for stricter oversight on hedge funds is by no means limited to the state level. Many members of Congress have been pushing for greater transparency after hedge funds got blasted for having a hand in the financial crisis thanks to controversial practices like short selling.
Others push for heightened regulation due to the recent outbreak of Ponzi schemes from so-called “trustworthy” individuals, like Arthur Nadel of Sarasota or the obvious case of Bernard Madoff where hundreds of investors were swindled out of their retirement. However, many who oppose the oversight based on increased fraud argue that investors are ultimately responsible for where their money goes and should perform greater due diligence themselves before trusting anyone with large sums of capital.
Republican State Representative John Stripp told the Hartford Business Journal that it’s not about a “vendetta against hedge funds,” just that “there is a need to have some kind of regulation in place.”
Even European finance ministers agreed this past weekend to the direct regulation of hedge funds overseas, leading most to believe that the era where hedge funds could get away with anything, is coming to an abrupt end.
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) – SEC Commissioner Luis Aguilar said his agency should be given the authority to regulate hedge funds after urging Congress “to close the glaring loopholes in securities regulation.”
Aguilar, one of the agency’s five commissioners, is among many who are calling for greater oversight in an industry that has been ravaged by turmoil and most recently, fraud.
The SEC has been accused of lax regulation after a tumultuous year where many financial institutions imploded. That belief was further fueled after the string of recent fraud cases involving intricate Ponzi schemes, incling the Bernard Madoff scandal that swindled billions out of investors. Even since his infamous arrest, there have been a handful of cases that have surfaced, leaving a wake of angry investors with their fingers pointed to the SEC.
Mary Schapiro, who Barack Obama appointed as head of the SEC, has come out in favor of a mandatory registration by hedge funds, although she has not vocalized any wrong doing by the agency in recent months.
“Currently, the SEC is prohibited from exerting jurisdiction over particular financial instruments that seem to fall squarely within the agency’s mission,” Aguilar said, while stating his belief that the merging of the SEC with the Commodity Futures Trading Commission would remedy the situation of who regulates what.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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
