U.S. rejects $18M deal with Falcone, hedge fund (USAToday)
The Securities and Exchange Commission has rejected an $18 million settlement that would have banned billionaire hedge-fund manager Philip Falcone from the securities industry for two years. Falcone and Harbinger Capital Partners were told Thursday that SEC commissioners voted down the settlement, according to a filing Friday by parent company Harbinger Group. The SEC’s enforcement staff had proposed the deal in May. The deal sought to settle civil fraud charges by fining Falcone and hedge-fund firm Harbinger Capital $18 million. The SEC has accused Falcone and the firm of using fund money to pay his taxes and favoring some clients over others.
SEC Tries Last Ditch Move to Put SAC’s Cohen Out of Business (Bloomberg)
In the end, billionaire Steven Cohen, one of the most successful hedge-fund managers of his generation, could end up getting banned from the business he dominated for an error of omission, not commission. In an administrative action that constitutes its first formal salvo against Cohen, the U.S. Securities and Exchange Commission alleged he failed to supervise two wayward portfolio managers and ignored “red flags.” The agency stops short of accusing the owner of SAC Capital Advisors LP of insider trading. While the proceeding may result in his being barred from managing other people’s money, it won’t carry the potential penalties available if the SEC had sued him…
Dell, Silver Lake Said to Disagree on Breakup Fee If LBO Fails (BusinessWeek)
As Dell Inc. (NASDAQ:DELL) shareholders brace to vote this week on a $24.4 billion sale to Michael Dell and Silver Lake Management LLC, the founder and his financial backer are said to disagree about the payout of breakup fees should the buyout fail. …The computer maker last week postponed the vote to July 24, prolonging months of jousting between the group led by Dell Inc. (NASDAQ:DELL), who is also chief executive officer, and investors such as Icahn who want a higher price. Icahn proposes a $14 a share buyback for about 1.1 billion Dell Inc. (NASDAQ:DELL) shares, plus a warrant that could be exchanged for additional stock should Dell Inc. (NASDAQ:DELL) limb higher than $20. The company would remain public under Icahn’s plan.
Credit Suisse Hedge Fund Index down 1.66 per cent in June (HedgeWeek)
Hedge funds, as measured by the Credit Suisse Hedge Fund Index, finished June down 1.66 per cent, with two out of 10 strategies in positive territory. In total, the industry saw estimated outflows of approximately USD1.09bn in June, bringing overall assets under management for the industry to approximately USD1.95trn. The equity market neutral sector experienced the largest asset inflows on a percentage basis, with inflows in June equal to 1.11 per cent of the May 2013 levels.
Larry Summers’ Bad Bet (DailyReckoning)
The Argentine government has promised to make a payment on a US dollar bond in 2015. That obligation is part of a sophisticated derivative instrument…which is one of the key assets of Hedge Fund A. It borrowed the money to buy the derivative from Bank B. Now Hedge Fund A’s debt to Bank B is a critical part of Bank B’s capital. But what happens if the Argentines don’t pay? You see, the collateral in a credit system is debt. And when debt goes bad, the system cracks up. The only thing that can stop the crack-up is a gush of more credit.
Hedge fund, private equity firms feeling new registration push (PIOnline)
A heightened focus by officials at the Securities and Exchange Commission on how fees are earned by hedge fund and private equity firms has some managers braced for more oversight, including a long-resisted move to make them register as broker-dealers. Driven in part by the SEC’s interest in fee-related activity, pension funds and other investors “have increased their expectations and requests for information,” said Ron Geffner, an attorney with Sadis & Goldberg, New York, and who serves on the Hedge Fund Association’s regulatory and government advisory board. “The marketplace has become more sensitive to how people are compensated,” which is causing the hedge fund industry to “shrink a little.”
Don’t look for hedge funds to take out billboards with end to advertising ban (DallasNews)
I had to laugh when I heard the recent news that government regulators had adopted a rule allowing hedge funds to advertise — to shill as it were. The Securities and Exchange Commission has lifted the 80-year-old advertising ban amid considerable hand-wringing and dire predictions from opponents of the new rule. They are concerned hedge funds will entice the well-heeled into putting money in all manner of ill-conceived investment opportunities. …Heck, most are reluctant to reveal their investing strategies to their mothers, much less to plaster it on a highway billboard.