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.
Economic Times – A former Intel Corp engineer has been charged with stealing trade secrets worth $1 billion from the chip maker while he worked for Advanced Micro Devices Inc.
Federal prosecutors in Massachusetts alleged this week in a five-count indictment that Biswamohan Pani, 33, illegally downloaded more than a dozen confidential documents from Intel’s computer system in California during a four-day stretch in June. He had already resigned from Santa Clara, California-based Intel, but remained on the payroll and still had access to the company’s computers while he burned unused vacation days.
What Pani’s supervisors didn’t know then is that instead of taking the time to investigate a hedge fund job Pani claimed he was considering, he had actually started working for AMD and for a brief period was on both companies’ payrolls.
Newsday – A federal probe of the $1.8-billion collapse of Bear Stearns hedge funds has spread to include the activities of a number of banks and other lenders, according to court records and legal sources.
Investigators are also reviewing various private financial memorandums prepared by Bear Stearns officials for possible fraud against wealthy investors, said the sources.
One of the banks that may have been defrauded in the case was Barclays Bank PLC, the British institution that last year filed a federal lawsuit against Bear Stearns & Co. Inc. over losses from the hedge fund, said one attorney familiar with the case.
Federal prosecutors in Brooklyn are overseeing the Bear Stearns case while other Wall Street probes are being carried out by federal officials in Manhattan, said attorney Andrew Entwistle, who is representing investors suing the parent Bear Stearns Companies Inc. and affiliates.
West Palm Beach (HedgeCo.net) – Bracewell & Giuliani LLP today announced that it has formed a multi-disciplinary Task Force to guide financial institutions, private investment funds, institutional investors and other market participants through the legislative, regulatory and enforcement challenges posed by the Troubled Asset Relief Act and other impending actions by Congress, the Treasury Department, the Federal Reserve and the SEC.
The Task Force will focus in particular on legislation, regulatory actions, enforcement matters and strategic communications to assist market participants in their efforts to navigate one of the most significant governmental actions in the history of the U.S. economy.
Commenting on the formation of the Bracewell Task Force, senior partner Rudy Giuliani said, "Our team of former government officials and experienced attorneys in the fields of legislation, enforcement and finance are equipped to guide institutions in this quickly evolving and complex environment." Mr. Giuliani noted that the Bracewell Task Force includes a former Comptroller of the Currency, a former Assistant Secretary of Legislative Affairs of the U.S. Department of the Treasury, former members of Congress from both political parties, former federal prosecutors, and former SEC enforcement attorneys.
In addition, the Bracewell Task Force will draw heavily upon our resources in the areas of broker-dealer and market regulation, financial restructuring, and corporate and securities.
As part of its services, the Task Force is establishing a blog to relay critical real-time information on the development of policy related to the legislation, regulation and enforcement priorities, and will also be providing periodic updates directly to interested clients.
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Bloomberg – The brother of former Bayou Group LLC finance chief Daniel Marino, who is serving 20 years in prison, pleaded guilty to a federal charge that he helped conceal a $400 million fraud at the bankrupt hedge-fund firm.
Matthew Marino entered his guilty plea yesterday in U.S. District Court in White Plains, New York, federal prosecutors said. Marino faces as long as three years in prison when he’s sentenced on Dec. 4, according to prosecutors.
Marino admitted “that he knew a fraud was being perpetrated on Bayou investors,” U.S. Attorney Michael Garcia said yesterday in a statement.
Daniel Marino was sentenced in January to 20 years in prison for defrauding investors. Bayou co-founder Samuel Israel is serving a 20-year prison term.
Bayou, based in Stamford, Connecticut, was among the biggest hedge-fund firms to come under federal scrutiny for missing money. Bayou filed for bankruptcy in May 2006, prompting lawsuits claiming it operated a Ponzi scheme that paid off old investors with money from new ones.
Defense attorney Eugene Riccio said yesterday in a phone interview that Matthew Marino pleaded guilty to misprision of a felony for failing to report the crime. Marino faces as long as 27 months in prison under federal sentencing guidelines, Riccio said. He declined to comment further.
Reuters – U.S. federal prosecutors asked securities regulators to delay a civil case against two former Bear Stearns hedge fund managers while they hold grand jury hearings in building a criminal case against the pair.
Fund managers Ralph Cioffi and Matthew Tannin were arrested and indicted in June, the first executives to face federal criminal charges in fallout from the subprime mortgage crisis. Both pleaded not guilty. A trial date has not yet been set.
The Securities and Exchange Commission had also begun civil securities fraud charges against Cioffi and Tannin, accusing them of misrepresenting the investments of two funds they oversaw.
A memorandum filed on Wednesday by U.S. Attorney Benton Campbell in the U.S. District Court in Brooklyn asked for a stay in the civil case until the conclusion of the criminal case.
"A stay is necessary in the civil case to preserve the secrecy of the ongoing grand jury proceedings," the memorandum said.
The document said the SEC was consulted and took no position on the stay, and that the defendants had declined to comment on the request.
New York (HedgeCo.Net) – Troubles keep arising for Bear Stearns, even after its demise and the resulting takeover by JPMorgan Chase. It seems investors are still targeting Bear after the implosion of their two failed hedge funds last year that kicked off the subprime mortgage crisis.
Federal prosecutors, along with the SEC, may bring criminal charges against Ralph Cioffi and Matthew Tannin, who ran the High-Grade Structured Credit Strategies Enhanced Leverage Master Fund and the High-Grade Structured Credit Strategies Master Fund.
The two funds at one point managed upwards of $20 billion, with a majority of their assets invested in subprime-mortgage backed securities. As homeowners started defaulted on their mortgages at record rates, these securities plummeted in value, and creditors started to demand more collateral.
Even an influx of $1.6 billion by Bear Stearns could not save the funds, and assets were subsequently frozen. Both funds eventually filed for bankruptcy with only a small portion remaining of investor’s money.
A failed request at a Cayman Islands liquidation sealed the deal for Bear, who no longer could shield the fund’s assets from investors.
The question arises of whether or not Bear Stearns overstated their securities values to shareholders. At times, the two managers were quoted as reporting the performance of the funds as “positive,” when in reality, it was down as much as 38%.
According to the Wall Street Journal, securities fraud charges may be filed against the two men by next week.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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India Daily- The Bear Stearns Hedge Fund Managers are getting indicted for starting the credit crisis. According to media sources, Federal prosecutors are preparing to file criminal charges against managers of two Bear Stearns Cos. hedge funds whose collapse helped mark the start of the credit crisis. The U.S. Attorney’s office in Brooklyn is in the process of completing interviews of witnesses and other key people in the case this week, and has indicated to lawyers with interest in the case that indictments could be imminent.
The former Bear Stearns managers, Ralph Cioffi and Matthew Tannin, managed two high-profile bond portfolios for the securities firm’s asset-management unit. Bo doubt they aere one of the helpers in triggering the crisis. But are they really the root cause of the credit crisis?
