Slow Your Judgments on Fast Trading (BloombergView)
In a recent pair of articles (part I, part II), hedge-fund magnate Cliff Asness defended high-frequency trading against most of the attacks that have been leveled against it. Asness is known for his strong opinions. And while I’m generally on his side in this case, a careful reading of his articles shows that he may have overstated his case and we shouldn’t be so quick to conclude that HFT is completely benign. A lot of people claim that HFT is legalized front running, allowing traders to improperly buy or sell ahead of customers. Asness defends HFT from this claim by narrowing the definition of front running; he insists that if you don’t trade on information that was entrusted to you, you aren’t really front running:..
IRS Backs Investors Seeking Change to Hedge Fund Fees (BusinessWeek)
The U.S. Internal Revenue Service issued a ruling that clears the way for institutional investors to seek changes to incentive fees assessed by hedge funds, which may make it cheaper for them to invest in such offerings. The ruling, 2014-18, clarifies that hedge funds can charge incentive fees cumulatively rather than annually without running afoul of a tax law change adopted in 2008. These fees, typically equaling 15 to 20 percent of an investor’s profits, comprise a big portion of a hedge fund manager’s annual revenue.
Gupta Asks Supreme Court to Allow Him to Remain Free During Appeal (WSJ)
Former Goldman Sachs Group, Inc. (NYSE:GS) director Rajat Gupta on Tuesday asked the Supreme Court to allow him to remain free on bail while he continues to challenge his 2012 insider-trading conviction. If the high court doesn’t continue Mr. Gupta’s bail, he will be required to report to prison June 17. Mr. Gupta, a former director at Goldman and The Procter & Gamble Company (NYSE:PG) +0.07%, was convicted on three securities-fraud counts and one count of conspiring to pass along inside info to Galleon Group hedge-fund founder Raj Rajaratnam. Mr. Gupta was sentenced to two years in prison. Mr. Rajaratnam is serving an 11-year prison sentence and has his own appeal pending at the Supreme Court.
World’s highest-paid hedge fund manager worth $10 billion ‘splits from his wife of 28 years’ (DailyMail)
The world’s highest-paid hedge fund manager – who is worth an estimated $10 billion – has split from his wife, friends have revealed. David Tepper, 56, and his wife, Marlene, 55, have not yet formally filed for divorce but have separated and are telling friends that the marriage ‘has run its course’, a source told PageSix. ‘They hope to settle things quickly, quietly and amicably,’ the source said. The head of $20 billion Appaloosa Management is worth an estimated $10 billion and made $3.5 billion in 2013 alone – meaning that divorce proceedings could reach eye-watering sums.
Lovell Minnick Partners acquires minority stake in 361 Capital (PIOnline)
Lovell Minnick Partners, a private equity firm, is taking a minority stake in hedge fund manager 361 Capital, said W. Bradford Armstrong, principal with Lovell Minnick Partners. Financial terms and the size of the stake are not being disclosed. “Lovell Minnick Partners’ interest in 361 Capital is based on a combination of an excellent management team and a significant opportunity in developing liquid alternatives products for registered investment advisers and other investors,” said Jeffrey Lovell, chairman of Lovell Minnick Partners.