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EasyBourse.com - Global securities regulators have formed three task forces targeting short selling, hedge funds and unregulated financial trading, in an effort to take "urgent action" to coordinate responses to current market turmoil, Securities and Exchange Commission Chairman Christopher Cox announced Monday.
The newly formed short-selling task force, chaired by the Securities and Futures Commission of Hong Kong, will work to eliminate different approaches to "naked" short sales, including delivery requirements and disclosure of short positions, while minimizing any harm to legitimate securities lending, hedging and other transactions. Read Complete Article
Bloomberg - Hedge-fund managers including George Soros and Philip Falcone, in an unprecedented appearance before Congress, defended their practices and profits while splitting over whether the U.S. should impose stricter regulations.
"This is not a case where management takes huge bonuses or stock options while the company is failing,” said Falcone, one of five billionaire investors who testified today before the House Committee on Oversight and Government Reform in Washington.
Falcone, senior managing director of New York-based Harbinger Capital Partners, urged Congress to require more disclosure by hedge funds, which oversee $1.7 trillion of investments. Soros, founder of Soros Fund Management LLC, cautioned against “ill-considered” rules because this industry is reeling from market losses and client defections.
Sydney Morning Herald - The hedge fund industry says it supports federal government plans to ban naked short selling and impose a disclosure regime for covered short selling.
The Australian arm of the Alternative Investment Management Association (AIMA) said the group had been in talks with regulators and the federal government about legislation to go to parliament on Thursday.
But while it supported the naked short selling ban, moves to create greater transparency of covered short selling activity on the Australian stock exchange did not go far enough.
Guardian.co.uk - MEPs will call tomorrow for EU legislation to force private equity groups and hedge funds to disclose unprecedented amounts of information about their activities.
The demand for tougher regulation comes as private equity groups are warning that the enduring credit crunch will reduce new money inflows into their funds by up to 30% over the next two years, and mirrors a call from the UK’s largest trade union, Unite, for hedge funds to be forced to demonstrate that their investment strategies are not perpetuating the current market turmoil.
The union, which has put forward an emergency motion to the Labour party conference on the Lloyds TSB takeover of HBOS, is demanding that hedge funds be more transparent, give greater disclosure and must be subject to risk management.
Times Online - The European Parliament will support calls tomorrow for Europe-wide legislation aimed at making the inner workings of hedge funds and private equity more transparent.
The proposals - championed by Poul Nyrup Rasmussen, the Socialist MEP and a former Danish Prime Minister - call for clear rules for these financial players, whose influence on the economic landscape is increasing.
MEPs want the European Commission to present, before the end of the year, legally binding minimum transparency rules on how investments are financed. These rules would also cover the qualifications of managers, possible conflicts of interest, registration of hedge funds and disclosure of ownership structures.
Peter Skinner, a Labour MEP and the party’s spokesman on financial services, said yesterday: “Current self-regulation attitudes are not enough to arrive at satisfactory conclusions, especially in the light of the current crisis. This is an important step to tackle current problems, including lack of transparency.”
Evening Standard - Krom River, which has £453 million in assets, said it was moving to Switzerland, known for its low tax regime.
The fund is one of the few to perform well in the credit crunch and would see its partners’ income tax rate fall from 40 per cent to 10 per cent with the switch to the small town of Zug, south of Zurich.
The move makes the firm the latest to quit London for lower tax regimes. It came as HSBC fuelled fears of an exodus of leading companies. Three FTSE250 firms disclosed last month that they were leaving London.
The disclosure by Britain’s biggest bank that it was reviewing having its headquarters in London will heap more pressure on the Government to end uncertainty over its tax policies. Key tax concerns include government proposals to begin taxing "non-domiciled" foreign staff.
The disclosure by Britain’s biggest bank that it was reviewing having its headquarters in London will heap more pressure on the Government to end uncertainty over its tax policies. Key tax concerns include government proposals to begin taxing "non-domiciled" foreign staff.
Wealth Bulletin - The UK’s financial regulator has hired Australian Andrew Crain to head up the team that oversees the roughly 40 largest hedge fund managers that operate in the UK. Crain, a former regulator in his home country, assumes his new job later this month.
The team he will run sits within the wholesale investment division of the Financial Services Authority, the UK’s equivalent of the US Securities and Exchange Commission.
The appointment comes as the UK regulator is stepping up efforts to discourage unsavoury behaviour, including insider trading and other market abuses by hedge funds and others.
Those efforts have included measures that are widely unpopular among fund managers, including a rapidly introduced rule requiring disclosure of short positions — or bets that a stock will fall — in certain circumstances.
Wealth Bulletin- In January, 14 of the UK’s largest hedge funds, including Man Group, Brevan Howard and Gartmore, backed the Hedge Fund Working Group’s best-practice standards.
These aim to improve governance and disclosure and to promote transparent and independent valuation.
Six months on, however, only one, unnamed, hedge fund beyond the 14 working group members, has signed up to the code.
Sir Andrew Large, chairman of the working group, believes it is unrealistic to expect hedge funds to sign up immediately.
Financial Times- Several of London’s largest hedge funds are backing Barclays’ £4.5bn ($8.9bn) capital increase, underscoring the complex roles they are playing in the recapitalisation of the UK banking sector.
GLG Partners, Lansdowne, CQS and Och-Ziff have all agreed to take up a large chunk of Barclays shares as part of its £1.7bn placing with institutional shareholders, according to the prospectus issued by the bank on Thursday.
The news comes after hedge funds have been under intense scrutiny for their actions in selling short the shares of banks attempting to raise capital through rights issues. The Financial Services Authority unexpectedly tightened its rules on the disclosure of short-selling in an attempt to stamp out what the regulator believes were attempts by hedge funds to force down banks’ share prices artificially.
Wealth Bulletin- A spokesman for the HFWG confirmed last week that the guidelines, which were aimed at raising governance levels across the traditionally secretive industry, have found no support beyond the original 14 signatories - including Man Group, Brevan Howard, Och-Ziff Capital Management and CQS.
At the publication of the 28 principles more than five months ago, HFWG chairman Sir Andrew Large had urged investors to help take the matter forward, adding that this was essential to ensure a wide adoption of the disclosure-based voluntary initiative.