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New York (HedgeCo.net) – Northern Trust has been named the Best Overall Hedge Fund Administrator by HFMWeek in the magazine’s inaugural U.S. Service Provider Awards. The awards recognize companies that have outperformed their peers during 2008-2009 and demonstrated financial progress, growth and genuine innovation.
“Northern Trust was recognized for the strength of its service offering and for demonstrating business momentum and product innovation during a challenging period for the hedge fund industry,” said Lucy Guest, senior publishing executive for HFMWeek.
“The importance of a Third Party Administrator is now being disseminated throughout the industry so that all funds, including start ups, are embracing the need for the service.” Joe Goldstein, Managing Partner at G&S Fund Services, said. “Prior to Madoff, start up and smaller funds were reluctant to use third party administrators even though we provided them with a higher quality of financial management at a lower cost.”
What Goldstein sees as a change in the industry is that the necessity of a hedge fund administrator is now understood by investors. “This change is contributing to the growth of the hedge fund administration business, as funds who were reluctant to use hedge fund administrators are now either turning over their financial administration to a third party, or at very least using them to review and confirm their NAV calculations.” Goldstein said.
Northern Trust has a growing hedge fund servicing business, with assets under administration of $75.5 billion as of June 30, 2009, an increase of 54 percent over the prior year. Northern Trust services nearly 300 hedge funds worldwide as of June 2009, and in the previous 12 months had provided global operations services to more than 120 new fund launches and transitions.
“We’re delighted to be recognized as best overall administrator as it validates our approach of blending innovative technology, strong process and automation with the exceptional service standards that set Northern Trust apart from our competitors,” said Matt Ward, Head of Fund Administration-North America for Northern Trust. “Ultimately this is a service business and our experienced and attentive people are the real strength of our offering.”
Reuters – New Castle Partners LLC, a hedge fund swept up in the biggest insider-trading scandal in years, said co-founder Mark Kurland has taken a leave of absence and that Danielle Chiesi, a consultant, is no longer associated with the firm.
Kurland and Chiesi were among six people, including Galleon Group founder Raj Rajaratnam, charged on Friday by the U.S. Justice Department and the U.S. Securities and Exchange Commission, accused of reaping more than $20 million by trading on inside information in a dozen companies.
Forbes – Southridge Capital Management, a Ridgefield, Conn., hedge fund firm run by Stephen Hicks that primarily employs an investment strategy known as PIPEs, is under investigation by the Securities and Exchange Commission and Manhattan District Attorney Robert Morgenthau.
The SEC has opened an investigation into Southridge, according to two subpoenas the SEC sent in late July to companies that had received financing from the firm’s hedge funds.
Securities Industry News – Hedge fund manager Philip Goldstein, who successfully curbed the Securities and Exchange Commission’s attempts in 2006 to regulate hedge funds, has lost a “freedom of speech” case against the state of Massachussetts.
A Massachussetts court on Sept. 30th ruled that the state’s fop financial regulator,the Massachussets Secretary of the Commonwealth was allowed two years ago to order Goldstein to stop unqualified investors from looking at his firm’s website for information on the funds his firm, Bulldog Investor, manages. William Galvin, the secretary of the commonwealth, had also ordered Goldstein to pay a $25,000 fine.
The case — Suffolk Superior Court Civil Action No. 07-1261-BLS2, Bulldog Investors General Partnership, et al. vs William F. Galvin, Secretary of the Commonwealth of Massachussetts –involved an unsolicited request for information through the Bulldog website in January 2007 by a Massachusetts resident who did not qualify under current securities law to receive such information because of insufficient net worth.
South Florida Business Journal – A federal court judge has ordered former hedge fund manager Michael Lauer to pay a $500,000 civil penalty.
The order was issued Aug. 17, but only announced in a Securities and Exchange Commission news release Wednesday.
The SEC had asked that Lauer be ordered to pay $1 million.
However, in deciding how much he should pay, Judge Kenneth A. Marra, of the U.S. District Court for the Southern District of Florida, recognized that Lauer has already been ordered to pay more than $62 million in disgorgement and prejudgment interest, and that he still faces criminal charges.
Daily Telegraph – The Financial Services Authority has agreed to work with the Securities and Exchange Commission the leading US financial regulator in an effort to better regulate the work of crossborder hedge funds.
The City watchdog has agreed with the SEC to move towards a common reporting platform for hedge funds and their advisers, as well as looking at the potential for shared regulatory requirements.
AP – The Fed would gain power over big firms whose failures could traumatize the system. Previously unregulated hedge funds, private-equity firms and investment advisers would have to register with the Securities and Exchange Commission.
All the regulators would force banks to keep more capital in reserve to offset risk. Regulators already are doing this, but the administration wants to make it law.
Reuters – U.S. securities regulators missed “numerous” red flags that may have led to Bernard Madoff’s $65 billion Ponzi scheme and never did a “thorough and competent” probe despite complaints dating to 1992, a federal watchdog has concluded.
The U.S. Securities and Exchange Commission’s inspector general said in a blistering report that despite five probes and having caught Madoff in “lies and misrepresentations,” the SEC failed to follow up on inconsistencies.
“Despite numerous credible and detailed complaints, the SEC never properly examined or investigated Madoff’s trading and never took the necessary, but basic, steps to determine if Madoff was operating a Ponzi scheme,” Inspector General David Kotz wrote.
MSN – Two agencies with oversight of the financial markets are trying to coordinate their regulations to eliminate differences involving similar types of investments and instruments.
The Securities and Exchange Commission, the government’s primary markets watchdog, and the Commodity Futures Trading Commission — which oversees the trading of oil, gas and other commodities as well as financial instruments — have battled in the past over regulatory turf and found separate supporters in Congress.
But as lawmakers craft an overhaul of the nation’s financial rules and consider the Obama administration’s sweeping proposal, the two agencies recently reached an agreement on sharing regulation of the over-the-counter derivatives market. Derivatives are traded in a $600 trillion unregulated market worldwide.
Baltimore Business Journal – Former Aether Systems CEO David Oros has launched a $3 million hedge fund called Global Domain Vector Fund LLC, according to a Securities and Exchange Commission filing.
Oros is managing director and chief administrative officer of Baltimore’s Global Domain Partners LLC. He is joined by Jonathan Caplis, a director at Global Domain, as a managing member of the hedge fund, the filing says.
The fund was incorporated in 2005 and its first sale took place April 1, according to the Aug. 19 filing. It is accepting a minimum of $500,000 from outside investors.
The Associated Press – Shares of Bank of America shot up Thursday as a new executive at the bank, as well as a prominent hedge-fund manager, decided to place big bets on the company by buying up blocks of shares.
Shares jumped $1.07, or 6.7 percent, to close at $17.
Sallie Krawcheck, the former Citigroup Inc. executive hired last week as part of a management shake up at the Charlotte, N.C.-based bank, bought more than $1 million worth of the bank’s shares on Wednesday, according to a filing with the Securities and Exchange Commission on Thursday.
News1130.com – The Securities and Exchange Commission is continuing its investigation of possible insider trading involving hedge fund Pequot Capital Management and its founder Arthur Samberg, according to a letter to investors obtained by The Wall Street Journal.
The SEC has been examining whether Pequot traded Microsoft Corp. shares on confidential information provided by a former employee of the computer company who was later hired by Pequot.
