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.
Bloomberg – John Paulson, the hedge-fund manager whose wagers against the U.S. housing market helped him earn an estimated $2.5 billion last year, bought Bank of America Corp. and Goldman Sachs Group Inc. stock in the second quarter, while adding to stakes in gold companies.
His firm, Paulson and Co., bought 168 million shares of Charlotte, North Carolina-based Bank of America valued at $2.2 billion as of June 30, according to a filing yesterday with the U.S. Securities and Exchange Commission. It was the biggest new purchase in the second quarter for Paulson, 53, and made him the bank’s fourth-largest owner.
Bloomberg – Atticus Capital LP, the New York- based hedge-fund firm run by Timothy Barakett, reversed course in the second quarter, investing more than $3.5 billion in U.S.- listed stocks as equity markets recovered.
Atticus bought $355 million in shares of Charlotte, North Carolina-based Bank of America Corp., a new position, according to a filing yesterday with the U.S. Securities and Exchange Commission. The fund’s holdings in U.S. stocks rose to $3.71 billion as of June 30 from $118 million on March 31.
Bloomberg – A Dallas hedge-fund manager and entities he owns agreed to pay $788,016 to settle U.S. government claims they made more than $500,000 by shorting shares of companies while using inside information that issuers would conduct private placements.
Edwin Buchanan Lyon IV, 42, and his companies and funds agreed to disgorge $467,728, including interest, and pay a $310,288 fine to resolve the lawsuit filed by the U.S. Securities and Exchange Commission. Lyon is managing partner and chief investment officer of Gryphon Management Partners LP.
Bloomberg – Pequot Capital Management Inc., once the world’s biggest hedge-fund manager, was cited in at least 44 private reports from exchange watchdogs in the past four years alerting U.S. regulators to potential insider trading, market manipulation or other misconduct, government documents show.
Trades linked to Google Inc., Cox Communications Inc., International Securities Holdings Inc., Premcor Inc. and dozens of other companies prompted surveillance units policing U.S. exchanges to make the referrals to the Securities and Exchange Commission, according to agency records obtained by Bloomberg News. Thirty-six reports flagged possible insider trading. Four indicated possible manipulation and four were labeled “other.”
The Ledger – Federal regulators announced an agreement with Maurice R. Greenberg on Thursday to settle accusations that he oversaw an accounting fraud at the American International Group.
But Mr. Greenberg did not go quietly.
Shortly after the announcement from the Securities and Exchange Commission, Mr. Greenberg issued a defiant statement saying he had ”no responsibility” for the fraud at A.I.G., which he ran for about four decades ending in 2005.
Under the settlement, Mr. Greenberg agreed to pay just $15 million in penalties and disgorgement for overseeing fraudulent transactions at A.I.G.
Pittsburgh Post-Gazette – The family of a Cambria County manufacturer has filed a lawsuit claiming that a New York hedge-fund manager illegally took $750,000 from its trust fund.
The lawsuit, filed by the family of Frank Calandra Jr., was moved to federal court yesterday. It names as defendants Signature Bank Corp. and Cushner & Garvey LLP.
The man the family accuses of taking its money, Edward T. Stein, is not a named defendant.
Mr. Stein was charged with securities fraud in federal court in Manhattan in April. According to the Securities and Exchange Commission, Mr. Stein operated a Ponzi scheme involving some $55 million collected from investors.
Milwaukee Journal Sentinel – Five years after regulators forced the sale of Strong Funds to Wells Fargo and Co. at the height of a national mutual fund scandal, investors in 24 former Strong Funds are moving closer to receiving their share of a $154 million settlement.
A proposal for doling out the money was developed by an independent consultant and has been published on the Securities and Exchange Commission Web site.
The proposal, which awaits SEC approval, would give priority to reimbursing investors in 24 Strong funds whose losses were related to ”frequent trading.” Frequent traders often aim to take advantage of differences between the share price of a fund and the actual value of the securities it holds – a maneuver that can harm the interests of long-term shareholders.
istockAnalyst.com – The Securities and Exchange Commission unanimously endorsed the proposal amid widening investigations of so-called pay-to-play donations by private equity and hedge fund executives who jockey for lucrative fees to manage some of the more than $2.2 trillion in assets held by public pension funds.
"The selection of investment advisers to manage public plans should be based on merit and the best interests of the plans and their beneficiaries, not the payment of kickbacks or political favors," SEC Chair Mary Schapiro says.
Bloomberg – Let’s say you hand a million dollars or more to an investment advisory firm that boasts a sterling reputation, grand results and a promise to thoroughly investigate hedge funds before recommending them.
For all the claims of super due diligence, this fine firm sinks your money into what turns out to be a Ponzi scheme.
Now your money is gone and the hedge fund founder who lost it is serving 20 more than years. Federal regulators belatedly find that your adviser didn’t actually do that much due diligence.
The Bayou Group hedge fund it put you into hadn’t had an independent audit almost since its beginning when an initial auditor noticed consistent losses and was let go, according to the Securities and Exchange Commission.
Reuters – Hedge fund firm Perry Corp will pay $150,000 to settle accusations that it failed to report a substantial stake in Mylan Inc, purchased to support a proposed 2004 takeover of King Pharmaceuticals, the U.S. Securities and Exchange Commission said on Tuesday.
The New York-based firm, led by Richard Perry and with $8.8 billion under management at the end of March, settled without admitting or denying the allegations.
Bloomberg – The two main regulators of U.S. financial markets should merge, the chief executive of America’s largest options exchange says in remarks to be delivered to a congressional panel on Friday.
William Brodsky, CEO of the Chicago Board Options Exchange (CBOE), says in a written statement that there is a "compelling need for the merger" of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
CNBC – The Obama administration has sent legislation to Congress that would bring hedge funds and other private pools of capital under government supervision.
The proposal calls for the Securities and Exchange Commission to oversee hedge, private equity and venture capital funds. By registering with the SEC, their books would be open to federal inspection and they would be subject to disclosure requirements to investors and creditors.
