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 – Goldman Sachs Group Inc., unbowed by the securities industry’s worst year since the Great Depression, increased its trading bets at the fastest rate on Wall Street.
Goldman Sachs’s so-called value-at-risk, the amount the New York-based bank estimates it could lose from trading in a day, jumped 22 percent to $240 million in the first quarter, twice what Morgan Stanley stands to lose, company reports show. VaR climbed 2.8 percent in the same period at JPMorgan Chase & Co. and dropped 14 percent at Credit Suisse Group AG.
Jerusalem Post – While the recent G-20 summit in London provided world financial leaders with the opportunity to begin charting a path of recovery for the ailing global economy, the work to build the markets up and to ensure that a crisis like this never happens again will be left to the world’s securities regulators. Regulators around the world, due to their supposed lapse of supervision on the international securities industry, have come under fire for their role in allowing the crisis to occur.
Here in Israel, the country’s chief securities watchdog, Prof. Zohar Goshen, chairman of the Israel Securities Authority, has also been a center of attention with the publication of his "Goshen Plan," an ambitious agenda that seeks to restructure the local corporate bonds market by giving institutions a government guarantee covering 75-80 percent of new corporate bonds issued. This means the institutions will bear 20% of any loss, with the government bearing the rest.
West Palm Beach (HedgeCo.net) – Independent forensic professionals, Chris McConnell and Eric Steinwald are finding themselves in increasing demand as hedge funds and other investors turn to experts for help in recovering from losses caused by fraud, Ponzi schemes, stock market or real estate market losses.
"Any asset, at any time, may bercome subject to fiduciary duty standards, "McConnell said, "Fiduciary duty is not simply a good idea or a best practice; rather, it’s the highest standard known under the law."
McConnell, AIFA of Fiduciary Forensics, has over 25 years of experience in the field and is an acknowledged fiduciary expert in the securities, compensation and valuation fields based upon actual, inside hands-on Wall Street securities industry experience. Steinwald is a principal of Steinwald and Kaufmann, a Brentwood/Los Angeles, California tax and forensics accounting CPA firm, and also has 25 years of experience of serving financial clients. Together, the two bring over 50 years of unmatched expertise to plaintiffs who experience suspicious investment losses of any kind.
"Courts often hold trustees and/or third party investment fiduciaries (banks, brokers, trust companies, investment advisers, hedge funds, and even custodians) may be liable, measured against the expert investment standard regarding personal liability. "McConnell said, "The amount of potential fraud, loss of income, and/or insurance claims looks to increase dramatically as investors face staggering losses. We are ready to help as many people as we can to avoid potential financial catastrophe."
The difference between proving liability and recovering damages and loss is in the actual details, which often provide the edge for success.
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MIGHT two-and-twenty become one-and-ten? Since 1990 the number of hedge funds has grown by 14 times to over 7,000, but abundance has not lowered prices. Funds typically still charge clients a management fee of 2% of assets and 20% of any profits above a given hurdle. Rough calculations suggest that in the boom year of 2007, hedge funds globally received $33 billion in management fees alone—roughly equivalent to the bonus pool paid by Wall Street’s securities industry.
That may now be changing. The average hedge fund lost 18% during 2008, according to Hedge Fund Research, an analysis firm. Assets fell by a quarter, reflecting both losses and client redemptions, which are expected to accelerate. To prevent fire sales, perhaps a third of funds have restricted client withdrawals. Giving clients temporary fee cuts has helped sweeten this pill.
Dailyrecord.com – A judge presiding over civil claims filed against disgraced financier Bernard Madoff says he may be willing to consider extending relief from an investors’ fund to those who invested in Madoff’s business through third parties.
OAS_AD(‘ArticleFlex_1′);U.S. District Judge Louis L. Stanton told Daniel R. Goldenson and his wife in a letter dated Dec. 24 and made public Monday that their request to be eligible for relief from the Securities Investor Protection Corporation comes "early in the large and complex procedures which are underway with respect to Madoff’s affairs."
He said that before considering the issues involved in changing the terms of SIPC’s coverage, he would need a formal application and briefing from SIPC, the Securities and Exchange Commission, a trustee for Madoff’s business and representatives of investors.
The SIPC, which was created by Congress and funded by the securities industry, can give customers up to $500,000 each if it is determined their money was stolen. A telephone message seeking comment from the SIPC was not immediately returned Monday.
Wall Street Journal – With anxiety about hedge-fund woes gripping the market, funds have their own fear: their investors.
Some investors, particularly what are known as "funds of funds," are demanding their money back and may ramp up requests in the weeks ahead. That has prompted hedge-fund managers to sell securities to raise cash.
"As the hedge fund investor base broadens, hedge fund portfolio management…slips out of the hands of the portfolio managers and into the hands of the investors," wrote Andrew Redleaf, who runs Whitebox Advisors, a Minneapolis hedge fund with about $5 billion under management, in an August client letter. "It is no insult to the investors to say that this worsens performance."
Funds-of-funds select hedge funds on behalf of pension funds, wealthy individuals or other investors, and charge a layer of fees on top of the hefty fees levied by hedge funds themselves. They often ask hedge funds for the option to redeem money as often as monthly and get good terms because they can bring in big chunks of cash at once.
Wall Street & Technology – Now that Apple has improved security and enterprise connectivity capabilities for the iPhone 3G, industry specific applications are starting to emerge. One of the first iPhone applications for the securities industry is a tool that provides real-time portfolio management called Lab49 Capital from Lab49, Inc. a technology consulting firm that builds solutions for the financial services.
The application helps buy-side portfolio managers track the performance of their assets in real time, and "slice and dice" positions, P&L and changes in the portfolio across multiple dimensions such as strategy, industry, country and manager, according to Marc Jacobs, director at Lab49. (See a Lab49 Capital ScreenCast demo.)
"For a portfolio manager, they don’t spend all of their time at their desks," Jacobs adds. "But their mind is always ‘where are we right now?’ Allowing portfolio managers to such visibility into their fund is a key aspect that this application provides. Lab49 Capital is inspired by several projects we have going on with a number of firms. Lab49 Capital is a representation of actual work we are doing with some of our clients."
