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.
Forbes – French bank Societe Generale (SocGen) plans to reduce its holdings in its China fund joint venture due to regulatory concerns after a global reorganisation, two people familiar with the situation said.
SocGen already owns a fund venture with a unit of Shanghai Baosteel Group, and will become an indirect stakeholder in Credit Agricole’s Chinese venture after the two banks complete a planned merger of their global asset management businesses.
Reuters – A team of hedge funds managers at Societe Generale is leaving to set up their own hedge fund with capital from the French bank, La Tribune reported on Tuesday.
The paper said the move was led by Arié Assayag, head of Sgam Alternative Investments at SocGen, who would take with him some 15 members of staff to create a new outfit called Premium Asset Management (PAM).
ReviewJournal.com – The majority owner of the Greek Isles blamed "greedy hedge-fund guys" interested in wiping out the current owners’ equity stake for pushing the property into Chapter 11 bankruptcy Monday.
Harold Rothstein said the Greek Isles’ creditors have already taken $14 million in fees and interest out of the property since the financial markets collapsed.
"The ownership of the property was negotiating in good faith to reorganize and reposition the property," Rothstein said. "Even though the plan that was presented (to the creditors) was a plausible plan, the New York hedge fund is still acting like it was two years ago. They’re trying to play the big, bad wolf."
Reuters – Societe Generale and Credit Agricole have signed a preliminary agreement to merge their asset management arms and create a top 10 global player, the French banks said on Monday.
The new company will be 70 percent owned by Agricole and 30 percent owned by SocGen.
According to proforma figures from September 30, 2008, the new entity would have 638 billion euros ($826.5 billion) of assets under management. It would have revenues of 1.8 billion euros and an operating profit of 900 million euros.
New York (HedgeCo.Net) – French officials have arrested a trader who allegedly lost more than $1 billion in complex derivative trades. Boris Picano-Nacci of mutual bank Caisse d’Epargne was taken in for questioning last week, days after the loss forced the bank’s top three executives to part ways.
Prosecutors in Paris are currently investigating whether or not they can nail the 33-year-old trader for a possible breach of trust.
A copy of the bank’s internal investigation was said to have been obtained by French news magazine Nouvel Observateur, when they published the findings on Wednesday. According to that report, Caisse d’Epargne found lax internal controls and several alerts that had been disregarded.
The bank has stated that this was an error made by a small team of traders, who made a bad bet on the direction of the stock market while exceeding their trading risk limit.
French Finance Minister Christine Lagarde revealed that an initial investigation had uncovered “serious holes” in the bank’s controls.
This is the second trading scandal to rock a French bank this year. Societe Generale made headlines in January for its $7 billion loss thanks to 31-year-old rogue trader Jerome Kerviel.
Caisse d’Epargne is currently planning a merger with French mutual lender Banque Populaire.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
West Palm Beach (HedgeCo.net) – Moscow’s The Statesman reports that a Russian rogue trader lost his investment bank up to $50 million in risky trades that went wrong in the financial crisis, the Vedomosti business daily reported today. Quoting unnamed sources at Renaissance Capital, one of Russia’s biggest investment banks, Vedomosti reported that the rogue trader had disappeared.
A source close to the bank’s top management put the loss at about $50 million, although chief executive Mr Ruben Aganbegyan said it was only around $10 million. “He opened positions on blue-chip companies that were above the limits and outside of the controls. The market fell and we quickly found the problem,” he was quoted as saying.
The incident is eerily reminiscent of Nick Leeson ~ the rogue trader whose unchecked risk-taking caused the biggest financial scandals of the 20th century. The collapse of Barings Bank (personal bank to Queen Elizabeth II) in 1995 and Leeson’s role in it is one of the most spectacular debacles in modern financial history, according to the Leeson website.
Financial Times- A hedge fund manager who made some of the biggest profits from the global credit crisis said on Wednesday there was worse to come as evidence mounted that banks are struggling to regain their earnings power and properly value their assets.
Morgan Stanley said second-quarter profits plunged 60 per cent to $1bn and would have fallen further without $1.4bn in one-time asset sales, while revealing that it had suspended a suspected rogue trader for allegedly mismarking positions by $120m.
