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.
Reuters – Hedge fund Citadel Investment Group claims it is owed $470.5 million on derivatives contracts it held with Lehman Brothers, according to a claim filed in a New York bankruptcy court last week.
Citadel, which manages around $12 billion in assets, claims it is owed the money in its Citadel Equity Fund. The filing said the claim was at least partly based on a guarantee, but did not give details.
New York Times – The United States is building criminal cases against more than 150 American clients of UBS as part of a crackdown on tax evasion now made easier by a deal over access to secret account information.
U.S. prosecutors gave their first official confirmation of the initial number of criminal investigations in a filing on Tuesday with a federal court in Fort Lauderdale, Florida. The number of criminal probes is widely expected to mushroom soon, Reuters reported.
In the same court document, the prosecutors requested a sharply reduced prison sentence for ex-UBS banker Bradley Birkenfeld, a key informant in the ongoing U.S. prosecutions of wealthy American clients of UBS.
HedgeCo.net (West Palm Beach) – In order to achieve capital reduction, Swiss alternative investment company ALTIN AG has launched a share buyback program as part of a broader range of measures to reduce share price discount.
The hedge fund company has already succeeded in bringing the difference between the NAV and the share price from 33% at the end of 2008 to 21.7%. This, among other things, should enable ALTIN’s stock market price to come closer to the NAV.
The Annual General Meeting of shareholders approved a share buyback programme of up to 10% of the share capital. A second trading line for the registered shares of ALTIN will be opened on the SIX Swiss Exchange on 22 July 2009. ALTIN intends to buy back up to 5% of its shares until the end of March 2010.
The offer may be accepted only by Non-US persons, outside the United States.
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Detroit News – President Barack Obama is ready to roll out an overhaul of the intricate rules and systems that govern America’s troubled financial institutions, proposing the most ambitious revision since the Great Depression.
The goal is to prevent a recurrence of the economic crisis that erupted in the United States and exploded last fall with devastating consequences still reverberating around the world.
Unlike the government’s temporary ownership stake in automakers and major financial companies, the regulatory changes set to be announced Wednesday are designed to be permanent. They could result in a major realignment of power and authority among government agencies that set the rules for banking, lending and investing and touch American lives through daily transactions, from credit cards to mortgages and mutual funds.
Forbes – A Silicon Valley hedge fund manager accused of bilking investors out of at least $5 million has agreed to be extradited from Hong Kong to the United States, a government lawyer said Friday.
Fund manager Albert Hu, an American citizen, gave his consent to surrender to the U.S. in a Hong Kong court proceeding, said local government counsel Yasmin Mahomed, who represented U.S. authorities.
Miami Herald – The Obama administration’s bid for $50 million to move prisoners from the Guantánamo Bay detention facility was left out of the Democratic-authored emergency war spending bill unveiled Monday.
Defense Secretary Robert Gates had sought the funds in case the U.S. wanted to build or retrofit an alternative facility for the detainees in the United States. He called the funds ”a hedge” in case the government wanted to start construction.
However, when Democrats in the House of Representatives released their spending package Monday for funding the Iraq and Afghanistan wars and related expenses, the $50 million for Guantánamo was missing.
Here Is The City – According to recently published data (for the United States in particular), a large majority of short sellers are market makers who are hedging their bets on the options markets. They were not affected by the ban, which means that those who were using options to take synthetic short positions continued to do so.
The others involved in short selling are mainly hedge funds. The average return over the last ten years for hedge funds that used short-sale, convertible arbitrage and long/ short strategies was 3%, 4.75% and 7% respectively. One can hardly argue that they were over-informed and that they earned abnormal returns.
Reuters – Federal regulators said on Wednesday they do not know the whereabouts of billionaire Texas banker Allen Stanford, charged with a "massive" $8 billion international financial fraud.
"We are unaware of his whereabouts," Securities and Exchange Commission spokeswoman Kimberly Garber said from Texas.
Asked if Stanford may be outside the United States, she said: "Certainly that’s a possibility, but we don’t know."
U.S. marshals assisting the SEC have been unable to serve Stanford with court orders freezing assets and appointing a receiver to run his Stanford Financial Group companies since a raid on his Houston headquarters Tuesday, Garber said.
New York (HedgeCo.Net) – Merrill Lynch is still hoping to strike a deal in which Korea Asset Management Corp. would purchase a significant amount of their bad debt. Talks have been stagnant because of recent disputes over prices, but some say those debts could sell for under $200 million.
"We have been seeking to buy a significant amount, but a deal may be difficult at this rate,” said Lee Chol Hwi, head of Korea Asset, in an interview with Bloomberg.
Merrill, like other large financial institutions that have been pummeled by subprime related losses, is trying to raise capital to overcome the $40 billion plus of losses they have had to write down. Merrill recently had to get rid of about $31 billion of collateralized debt obligations, another form of mortgage backed securities, for about 22 cents on the dollar.
Korea Asset, which was created in 1962 and aims to purchase delinquent loans, set up a $870 million fund that buys bad debts in the United States. Lee says the company can afford to be patient, since he feels the turmoil in the marketplace is only going to push prices lower.
"The U.S. market desperately needs capital,” Lee said. "It’s practically a buyer’s market there.”
Shares of Merrill are trading for almost 66% less of what they were a year ago. Financial institutions have written down over $500 billion in losses stemming from the credit crunch. Merrill leads the pack along with Citigroup of those that have been hit the hardest, with the banks writing down $51 billion and $55 billion respectively.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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