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.
Caymen Net News – The Cayman Islands Financial Services Association (CIFSA) has addressed efforts to boost disclosure of information about hedge funds, and has cautioned that the move must be widely agreed and equally applied.
Meanwhile, regulators at the Cayman Islands Monetary Authority (CIMA) said it hoped the changes, contemplated for later this year, if approved, would aid industry transparency, improving global views of Cayman’s financial services industry as it struggles for approval from the Organisation for Economic Cooperation and Development (OECD).
“The most crucial aspect of this is to ensure that there is a comprehensive approach so that every regulated hedge fund is covered,” said CIFSA chairman Anthony Travers. “This should be achieved first. There is a real risk that disclosing partial information may colour the debate going forward and may not present Cayman in its best light.
HedgeCo.net (West Palm Beach) – A survey by RSM McGladrey, a financial services consultancy, found that hedge fund managers are surprisingly ready to work with SEC regulators to cooperate with authority, despite wide-spread wariness about over-excessive regulation from the Obama administration.
However, the Obama financial regulatory plan was a top concern with 75%, fearing that further regulation will go too far and stifle the market’s recovery.
The survey polled more than 100 hedge fund managers during the last month and focused on hedge fund industry sentiment toward the Obama administration regulation.
Fund managers are also optimistic about the industry’s prospects, according to the survey. 60% believe the current environment provides more investment opportunities than challenges. An overwhelming majority (69%) see the U.S. economy returning to positive growth by Q2 2010.
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Houston Chronicle – A London-based hedge fund manager and its chief investment officer have agreed to a nearly $18 million settlement resolving U.S. regulators’ allegations that one of its funds defrauded U.S. mutual funds and investors through trading practices such as market-timing.
The Securities and Exchange Commission and Headstart Advisers Ltd. on Monday separately announced a settlement in which the firm neither admitted nor denied allegations covering the period September 1998 through September 2003.
Headstart Fund Ltd., a hedge fund that had been incorporated in the Bahamas and is now defunct, will pay a $17 million penalty to resolve a complaint the SEC brought in April 2008. London-based Headstart Advisers will pay an additional $200,000, and Chief Investment Officer Najy N. Nasser will pay $600,000. The firm and Nasser are also barred from future violations of antifraud provisions of U.S. securities laws.
West Palm Beach (HedgeCo.net) – Euromoney Institutional Investor is planning to launch a new magazine and online offering covering US and international hedge funds in September.
The company’s hedge fund publishing assets include Institutional Investor’s Alpha magazine and Absolute Return magazine, which is published by HedgeFund Intelligence, the world’s leading information source on hedge funds. The new publication will be titled "AR".
"The new publication will include everything that Alpha and Absolute Return contained, but it will be a new magazine which will contain a lot of editorial that neither magazine does, including new surveys, rankings and high-powered web functionality," says Euromoney Institutional Investor chairman and Editor-in-chief Padraic Fallon.
"With the hedge fund sector under intense scrutiny from Washington, regulators and investors, this is an excellent time to launch a hedge fund publication," he says. "Building on the strengths of both Institutional Investor and HedgeFund Intelligence, we have the opportunity to produce the world’s leading hedge fund title which will keep investors, managers, regulators and the whole hedge fund community informed on developments in the sector."
"Hedge fund performance has recovered strongly in 2009, after the sector’s worst ever performance in 2008, and there are now significant opportunities," says Michelle Celarier, editor of Absolute Return. "The new magazine is an exciting development because it joins two prestigious monthly magazines that cover hedge funds to create a single authoritative voice. Our mission is to create the most insightful, entertaining and definitive content about the hedge fund industry, in both the printed magazine and online. We will offer readers information they cannot find elsewhere, including news and performance data on thousands of funds, along with in-depth analysis, research and profiles of the biggest hedge funds."
Advertising will be sold by Christine Cavolina, publisher of Institutional Investor, and the Institutional Investor sales team, led by Joy Desanto.
"AR will provide an unparalleled editorial environment for advertisers interested in the hedge fund industry," says Cavolina. "It presents the ideal opportunity for companies serving this audience to influence decision-makers and generate new business."
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Reuters – A global regulatory body backed compulsory registration of hedge fund managers on Monday to restore investor confidence, saying the $1.3 trillion sector did not cause the credit crunch but may have amplified its effects.
The International Organization of Securities Commissions (IOSCO) represents regulators from over 100 countries, including the United States, Japan and the 27-nation EU.
Its final 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.
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.
Free Internet Press – With the leveraged-buyout business on life support, major private-equity firms such as the Carlyle Group are taking a closer look at the battered banking sector as a way to make money for their clients.
Last September, Washington, D.C.-based Carlyle invested $75 million in Boston Private Financial Holdings. Last month, it was part of a group that injected $900 million into Florida’s BankUnited. Carlyle was part of a group looking to buy Atlanta, Georgia-based Silverton Bank earlier this month, until regulators decided to liquidate the institution instead.
Private-equity firms have long eyed the financial services industry, but the sector took a back seat over the past two decades as private equity pursued fat returns fueled by leveraged-buyout deals. Until recently, those buyouts helped Carlyle generate an annual net return of 26 percent across the firm..
guardian.co.uk – Investment companies and private equity firms suspect that they have been caught up in a directive whose real aim was hedge funds largely because it is so difficult to define hedge funds.
The Group of 20 leading world economies agreed in April that hedge funds above a certain size should be subject to authorisation and required to report data to supervisors as part of a broader extension of financial regulation in response to the global financial crisis.
But hedge fund managers believe the EU directive is so unclear and badly drafted that it would be dangerous to stick around to find out exactly what it means. The most worrying aspect of the directive is that it would allow regulators to limit the amount of leverage assumed by hedge funds.
Wealth Bulletin – Regulators will this week agree broad principles for clamping down further on hedge fund managers, after the European Commission proposed more draconian constraints on their activities.
At the 34th annual meeting of the International Organisation of Securities Commissions, starting today and hosted by the Israel Securities Authority and the Tel Aviv Stock Exchange, the hedge fund industry will come under the regulatory scanner. Greg Tanzer, secretary-general of Iosco, said: “Rules on hedge funds and short-selling will be finalised in Tel Aviv.
Reuters UK – Some hedge funds will leave the UK if draft new European law is not changed, said one manager present at a meeting this week with the Treasury, in which the industry expressed grave doubts about the rules.
Proposed new EU rules to force disclosure of leveraged positions and give regulators more control over borrowing levels could drive away managers, David Stewart, the head of Odey Asset Management, told Reuters in an interview.
"They’d have to (leave) in some cases. If you put in the leverage rules and (the fact) that Cayman funds couldn’t be sold into the EU, I don’t know how it operates," he told Reuters.
"There will be some people who go back to America."
Alibaba News Channel – Aggressive government action can hurt the market, but regulators should clamp down on leverage among banks and investors to prevent another credit crisis, veteran hedge fund manager Paul Singer said at a conference.
Singer said the current "anti-capitalist" fervor, inspired by last year’s market meltdown and the ongoing recession, will likely lead to increased regulation. These measures would only prolong the problem, he told some 1,200 hedge fund executives at the Ira Sohn Investment Research Conference on Wednesday.
By the same token, he observed that highly regulated banks fueled last year’s market implosion because they ramped up their use of leverage, or borrowed money, for trading and investments. High levels of leverage in a downturn can multiply losses and throw markets into chaos.
Forbes – Aggressive government action can hurt the market, but regulators should clamp down on excessive borrowing by banks and investors to prevent another credit crisis, veteran hedge fund manager Paul Singer said at a conference.
Singer said the current ‘anti-capitalist’ fervor, inspired by last year’s market meltdown and the ongoing recession, will likely lead to increased regulation. These measures would only prolong the problem, he told some 1,200 hedge fund executives at the Ira Sohn Investment Research Conference on Wednesday.
