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.
The Money Times – While the group of Indiana pension funds, holding $42 million debt in Chrysler, opposed the treatment meted out to them in the form of reorganization process with Fiat, the court denied hearing to the pension funds and upheld the decision of Chrysler- Fiat alliance.
While refusing the hearing to the pension funds, the Supreme Court issued a statement saying that the aggrieved parties must convince four out of nine judges that the matter is serious to warrants full appeal.
Indiana Treasurer Richard Mourdock, who led the cause of the pension funds, said that he was disappointed. “The United States government has, I continue to believe, acted egregiously by taking away the traditional rights held by secured creditors.”
VC Circle – Flower exporter Karuturi Global is raising Rs 290 crore from its promoter Ramakrishna Karuturi and a consortium of foreign institutional investors (FIIs). Both promoter and FIIs are together subscribing 241.5 million warrants of Rs 12 each, which would converted into one equity share. A group of four FIIs, which include hedge fund Monsoon Capital, are pumping in Rs 248.64 crore in the firm. The rest is being invested by the promoter, Ramakrishna Karuturi. The company is now seeking shareholders approval through a postal ballot.
The four FIIs investing in Karuturi will together hold a 29.82% stake in the post-issued capital. They include Emerging India Focus Fund (8.64%), India Focus Cardinal Fund (14.4%), Elara India Opportunities (3.91%) and Monsoon Capital (2.87%). The warrants can be converted within 18 months, and an amount Rs 3 per warrant would have to paid at the time of warrant allotment. The rest of the amount of Rs 9 would be paid when subscribing each equity share, which would have a lock-in of one year.
Reuters – Investment adviser MAG Capital and its owner settled U.S. regulators’ claims that it took warrants from three hedge funds it advised without compensating them, the U.S. Securities and Exchange Commission said on Tuesday.
The Los Angeles-based investment adviser and owner David Firestone, without admitting or denying the SEC’s allegations, will pay $100,000 and $50,000, respectively, to settle the SEC’s complaint.
On 44 separate occasions, between 2003 and 2006, MAG took warrants from its clients without compensating their funds for them, the SEC said.
According to the SEC, MAG’s hedge fund clients made investments in so-called private investment in public equity (PIPE) transactions.
The PIPE transactions included warrants and other securities. The hedge funds paid for the warrants as part of the bundle of securities sold by the issuers in the transaction.
However, MAG took a portion of the warrants in each transaction and did not compensate the hedge funds for the warrants it took, the SEC alleged.
Reuters HK – Asian hedge fund managers are waiting with dread to see if tough new short selling restrictions sweep across the region after Australia and Taiwan joined U.S. and UK regulators in cracking down on the practice.
Major Asian markets, such as Japan and Hong Kong, have so far held their fire. But industry executives, many angry with the recent restrictions, said the combination of market volatility and politics makes the outcome impossible to predict.
"My fundamental view is that it is utterly idiotic. In the current market environment, the priority I would have thought would be to encourage liquidity," said Peter Douglas, founder of Singapore-based hedge fund consultancy GFIA.
"Most regulators that I’ve met have been fundamentally quite sensible people, so you have to make the assumption this is driven a mixture of politics and public opinion. And that makes it very difficult to predict the course."
Reuters UK- The tumble in the price of oil over the past few weeks may have been exacerbated by hedge funds deciding that it was just too expensive, particularly in relation to gold.
While much of the fall has been put down to an assumption that demand will fall with the slowdown in leading economies, hedge fund specialists say there are also less fundamental reasons behind the move.
Financial Times- The 10-day-long search for missing hedge fund manager Samuel Israel is entering a critical phase with law enforcement agencies sparing no expense to ensure they "get the body back" before the trail goes cold.
Authorities are now working on the assumption that the body in question will eventually be found alive and in all likelihood in a country with no extradition treaty with the US, meaning Mr Israel could be anywhere from Bahrain to Burundi, Senegal to Syria.
The hunt for Mr Israel began last week when the 48-year-old failed to report to a prison in Massachusetts to begin a 20-year sentence for defrauding investors in the hedge fund Bayou Management out of more than $400m.
