Rajat Gupta Faces 5 Counts of Securities Fraud and 1 Count of Conspiracy to Commit (NYTimes)
SEC Raises Threshold for Comprehensive Hedge Fund Disclosures to $1.5B (FINAlternatives)
The Securities and Exchange Commission is poised to throw the alternative investments industry a bone this afternoon, raising the threshold for the most comprehensive disclosures to the regulator by hedge funds by half-a-billion dollars. Under the proposal, to be finalized and voted upon by the commission today, hedge fund managers with at least $1.5 billion in assets would be subjected to the most onerous reporting rules, including quarterly reports covering assets, leverage, positions, valuation and trading.
UBS Fined $12 Million Over Hedge Fund Short Sales (FINAlternatives)
UBS yesterday agreed to pay $12 million to settle allegations that it failed to supervise short-selling by its own traders as well as its hedge fund clients. According to the Financial Industry Regulatory Authority, UBS failed to verify that the shorts were not naked—that is, that the hedge funds could actually cover their shorts. It also incorrectly classified some of the trades as long bets.
Adam Zimbler, Ex-Goldman Sachs Trader, Launches Series of Small Cap Hedge Funds (FINAlternatives)
A former Goldman Sachs trader has launched a series of small-cap hedge funds. Adam Zimbler’s SLZ Capital Management invests primarily in the U.S., across sectors in stocks and credit. The long/short fund focuses on small-cap companies, HFMWeek reports. New York-based SLZ has launched three funds, seeded by several large strategic investors and global allocators, as well as with internal capital. The firm features former Silver Point Capital director of operations Marc Diagonale as CFO.
BNY Mellon Faces Forex Fraud Case in MA (WSJ)
Massachusetts’s securities regulator on Wednesday leveled civil charges against Bank of New York Mellon Corp. for allegedly defrauding a state pension fund through undisclosed markups in foreign currency exchange over a decade. The administrative case, where the parties hold a judicial proceeding outside of court under Massachusetts law, seeks the return of allegedly “tens of millions” in illegal profits, a fine, and a cease-and-desist order. It is the latest in a string of cases lodged against BNY Mellon, the biggest U.S. custody bank, in a growing currency-trading scandal.
S&P May Downgrade MF Global Credit Rating (WSJ)
On the heels of a debt-rating downgrade from Moody’s on Monday, Standard & Poor’s today said it may downgrade MF Global to junk status. Now, S&P rates MF Global’s counterparty credit rating at BBB-, the lowest investment-grade credit rating. S&P said it may downgrade due to concerns about MF Global’s “ability to generate near-term profitability, a possible increase in its market risk in relation to its capital base, and potential funding pressure,” the news release said. S&P also called MF Global’s exposure to troubled euro-zone debt “very high.”