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.
West Palm Beach (HedgeCo.net) - Bernstein Liebhard is investigating whether, among other things, these investment funds conducted proper due diligence before investing heavily in Madoff Securities, and whether these funds ignored the warning signs that Madoff was conducting a large-scale fraud.
Bernstein Liebhard is also investigating whether these funds misrepresented to investors the concentration of the funds’ investments in Madoff Securities. On December 11, 2008, Madoff was arrested by federal authorities who say Madoff admitted to operating a $50 billion Ponzi scheme in which Madoff used the principal investments of new clients to pay fictitious "returns" to other clients.
The criminal action against Madoff is pending in the Southern District of New York, 08-Mag-2735. Although Madoff had only a few individual clients that invested directly with him, individuals and institutions across the world invested indirectly and sometimes unknowingly in Madoff’s scheme through "feeder funds" – such as Fairfield Sentry Ltd. (run by the Fairfield Greenwich Group), Rye Select Fund (run by Tremont Group Holdings), and Kingate Global Fund (run by FIM Advisers LLP) – whose sole purpose was to funnel money to Madoff Securities.
Hedge funds and funds of funds invested heavily with Madoff’s feeder funds (including Fairfield) despite many warning signs that the consistent returns Madoff delivered were too good to be true. "
Hedge fund, fund of funds managers, or other collective investment fund that lost money as a result of its investment in Madoff Securities, may have a right of action to recoup losses," Bernstein Liebhard says "We has assembled a team of former government prosecutors, former SEC trial attorneys, and investigators to analyze the various legal claims available to investors injured by the Madoff scheme."
Bernstein Liebhard is one of the preeminent plaintiffs’ class action law firms in the country, having pursued hundreds of securities and consumer cases and recovering approximately $2 billion for its clients. It has been named to The National Law Journal’s "Plaintiffs’ Hot List" in each of the last six years.
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Bloomberg – D.E. Shaw & Co. LP, the investment firm run by David Shaw, and Farallon Capital Management LLC limited withdrawals by clients, joining more than 80 hedge-fund managers to impose restrictions in the past two months.
D.E. Shaw, which oversees $36 billion, capped redemptions from its Composite and Oculus funds, said two people familiar with the New York-based company. Farallon, a $30 billion firm based in San Francisco, did the same with its biggest fund after investors asked to get back more than 25 percent of their money.
The firms are two of the biggest to block withdrawals, known as putting up gates, so they aren’t forced to liquidate investments at distressed prices to raise cash. New York-based Fortress Investment Group LLC said yesterday it froze an $8 billion fund after getting redemption requests for 40 percent of its assets. Tudor Investment Corp., the Greenwich, Connecticut, firm run by Paul Tudor Jones, locked the $10 billion BVI Global fund last week ahead of plans to split the fund into two.
New York (HedgeCo.Net) – Hedge Fund firm Tudor Investment Corp. has suspended investor redemptions from its $10 billion BVI Global unit until March 31st, giving the company time to split the fund into two.
BVI Global was hit by a wave of client redemption requests after investors moved to withdraw 14 percent of their capital, according to a recent letter to investors. The hedge fund posted a loss of about 5 percent this year, while hedge funds as a whole lost an average of 22 percent through November 24th according to Hedge Fund Research Inc.
Tudor Investment Corp., run by Paul Tudor Jones, wants to separate the corporate bonds and loans from emerging markets and start a new fund called Legacy, according to a recent letter to investors. The BVI flagship fund will stick with its staple of stocks, bonds, currencies and commodities.
The company is asking clients to approve the split within the next two months. Capital would be placed into both the BVI Global Fund and the Legacy Fund, depending on the division of assets.
Tudor Investment Corp. manages approximately $17 billion. Jones’ Tudor Futures Fund has posted gains of 21 percent this year while the firm’s Tensor Fund Ltd has seen returns of about 34 percent, according to people familiar with the matter.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
Bloomberg – Tudor Investment Corp., the firm run by Paul Tudor Jones, temporarily suspended redemptions from the $10 billion BVI Global Fund Ltd. as it splits the hedge fund into two, according to a person familiar with the matter.
Tudor is planning to put hard-to-sell investments, mostly corporate bonds and loans from emerging markets, into a new fund called Legacy, said the person, who asked not to be identified because the information is private. BVI Global, which started in 1986, would focus on easier-to-trade stocks, bonds, commodities and currencies.
More than 80 firms have liquidated funds, restricted redemptions or segregated assets following stock-market declines and a credit freeze that started with rising defaults on U.S. subprime mortgages. Emerging-markets securities have fallen as commodity prices plunged and investors shunned riskier assets on concern the global economy is entering a recession. The MSCI Emerging Markets Index has dropped 58 percent this year.
CNNMoney.com – Wall Street equity traders usually thrive on volatility, but the latest arrival of carnage on their doorstep has distracted and confounded them.
This habitually brusque bunch is even more harried than usual, worrying about their livelihoods and the safety of their funds’ accounts in addition to the direction of a crazy market. One prominent form of escape: gallows humor.
Asked what floor he was going to in an office complex in Jersey City, N.J., an employee of one major brokerage replied, "I might as well go up to your floor, and apply for a job. It looks like we’re next."
Even the diehard speculators in the hedge-fund community are in a state of confusion. The funds have watched two of the prime brokerages that serve them collapse and another get swallowed by a bank in a few months, and some are close to sticking money under a mattress, said Lorenzo Di Mattia, manager of hedge fund Sibilla Global Fund. Some funds are too busy working out where to put their account to even bother with securities or commodities.
Forbes - U.S. activist hedge fund Atticus Capital has lost more than $5 billion this year, a source familiar with the matter told Reuters, after its funds were hit by heavy falls in financial stocks. Atticus, a high-profile player in deals such as Barclays‘ unsuccessful bid for ABN Amro last year, saw total assets under management fall to around $14 billion at end-July from more than $20 billion last year, the source said.
The losses were mainly due to a 32.9 percent loss in the $7 billion Atticus European fund from the start of the year to the end of August and a 25 percent fall in the Atticus Global fund.
The firm, which employs a variety of investor lock-ups, saw few investor redemptions. Atticus declined to comment. The firm, which views itself as a long-term investor, has nevertheless delivered strong performance in recent years.
In 2006 founder Tim Barakett earned $675 million, according to hedge fund industry publication Alpha Magazine.
MarketWatch – James Pallotta, vice chairman and managing director of U.S. public equities at Tudor Investment Corp., is leaving the giant hedge fund firm and plans to launch the Raptor Global Funds unit he runs as a separate business, according to a letter Tudor sent to investors this week.
Pallotta will spin off Raptor at the end of 2008 and set up a new, independent firm that will initially focus on public equity investments, Tudor explained. Over time, Raptor will branch out into private investments too, the firm added in the letter, a copy of which was obtained by MarketWatch.
"Tudor will support Jim in the creation of his new firm and anticipates that it will invest capital in new funds Jim launches," Paul Tudor Jones II, chairman of Tudor, wrote in the letter. "We expect there will be many opportunities for collaboration on investments in future years."
A spokesman for Tudor said the firm declined to comment.
Pallotta will continue to manage the Raptor Global and Altar Rock Funds as well as a portion of Tudor’s main BVI Global Fund. On Jan. 1, 2009, the management of the Raptor Global Funds will transition to the new firm.
West Palm Beach (HedgeCo.net)- New York based fund manager Auda Hedge LLC has selected hedge fund manager Northern Trust to provide fund administration, custody, banking and foreign exchange services to its fund of hedge fund program, with assets in excess of US$1 billion.
In January 2008, Northern Trust announced a worldwide exclusive partnership with youDevise to provide enhanced fund of hedge fund data to the fund of hedge fund community via the Hedge Information Provider ("HIP") system.
"Funds-of-hedge-funds have become the route chosen by many institutional investors when accessing hedge funds." Wilson Leech, head of Northern Trust’s Global Fund services group said, "By fully integrating HIP onto Northern Trust’s global platform we will be able to deliver an enhanced reporting capability and reduce operational risk, enabling our clients to make decisions faster and more effectively."
The HIP is an online portfolio management system developed specifically for funds-of-hedge-funds. It considerably improves the timeliness of information that funds-of-hedge-fund managers receive from underlying hedge funds regarding hedge fund holdings, current value, performance, liquidity and hedging, as well as a detailed breakdown of assets and transactions. HIP makes it possible for funds-of-hedge-fund managers to see portfolio management data daily that, historically, was only available monthly.
Where Northern Trust’s UK entities undertake regulated business, they are authorized and regulated in the United Kingdom by the Financial Services Authority.
New York – June 17, 2008 – MadisonGrey Global Fund Services and HedgeOp Compliance today announced a co-marketing agreement that will combine MadisonGrey’s total fund administration, accounting, cash management, and investor relations services with the leading web-based compliance platform for hedge funds and funds of hedge funds. The alliance enables MadisonGrey to use the ComplianceTrak fund-level engine for clients, providing them with custom compliance reporting and monitoring as well as offering preferred pricing for the ComplianceTrak advisor-level portal.
“At MadisonGrey, our aim is to deliver seamless yet comprehensive fund administration services. The addition of ComplianceTrak will help our clients accelerate workflow and build and maintain a solid compliance infrastructure,” stated James C. Lanshe, Chairman & Chief Executive Officer for MadisonGrey.
“We are proud to partner with MadisonGrey to offer their hedge fund and fund of fund client’s access to ComplianceTrak, stated Bill Mulligan, CEO of HedgeOp Compliance. “Our complementary business lines employ cutting-edge technology and both firms share a common vision of service excellence.”
MadisonGrey is an SAS70 compliant alternative fund administrator with an unwavering dedication to providing a superior client experience. Focused on the distinct needs of domestic and offshore hedge funds and funds of hedge funds, the firm offers complete fund accounting, risk analysis, record keeping, and workflow processes with compliance and operational oversight services. For additional information please visit madisongrey.com.
About HedgeOp Compliance
HedgeOp Compliance, LLC focuses exclusively on helping hedge fund and fund of hedge fund managers meet their compliance and operational challenges. HedgeOp has developed a successful business based on its proactive approach to servicing clients and proven reputation. Clients range from start-up hedge funds to large firms with well-established track records. HedgeOp’s business lines include specialized compliance consulting services, our proprietary ComplianceTrak software, and due diligence research and reporting for fund of funds. For additional information please visit hedgeop.com.
