Hedge Fund News: Cliff Asness, Dan Loeb’s Third Point Reinsurance Ltd., Textron Inc. (TXT)

Hedge Fund Madam, Comptroller Candidate Arrested In Drug Case (FINalternatives)
Kristin Davis, the former hedge fund administrator who spent four months in prison for running a prostitution ring, may be heading back to jail—and not to the high political office she seeks. Davis was arrested this week and charged with illegally selling prescription pills. Davis was released on $100,000 bond and plans to plead guilty to the four counts, each of which carries a maximum 20-year sentence. It is unclear how her arrest will impact her campaign for New York City comptroller. Davis, who ran for governor three years ago and had been mulling a run for mayor, leapt into the comptroller’s race when former Gov. Eliot Spitzer entered it.

SEC must cut fine against British fund over abusive trades – US court (Yahoo!7 News)
A British hedge fund firm and its chief executive must give up $38.4 million (£24.6 million) of profit tied to abusive mutual fund trading, but a civil fine in that amount must be reduced, in a case brought by the U.S. Securities and Exchange Commission, a federal appeals court said on Thursday. The decision by the 2nd U.S. Circuit Court of Appeals involving Pentagon Capital Management Plc and its chief Lewis Chester is among the last tied to an industrywide probe into market timing and “late trading” in funds, unveiled a decade ago by then-New York Attorney General Eliot Spitzer. Market timing involves rapid trading in violation of funds’ rules and at ordinary investors’ expense, and is considered improper. Late trading involves the trading of fund shares after the market closes but at old prices, and is considered illegal.

Open-government groups challenge Raimondo on hedge-fund information (The Providence Journal)
In a letter released Thursday, four open-government groups have voiced concerns to Rhode Island treasurer Gina M. Raimondo for withholding hedge-fund records from The Providence Journal. The groups – Common Cause Rhode Island, the state’s chapter of the American Civil Liberties Union, the Rhode Island Press Association and the League of Women Voters of Rhode Island – were reacting to a Journal story Sunday about the state’s $1 billion investment in hedge funds. The story discussed the secrecy surrounding hedge funds, and the treasurer’s decision to release heavily censored copies of reports detailing hedge-fund operations and, in some cases, fees.