Poor Raj: Hedge-Fund Titan Says Penalty Too Big (FoxBusiness)
Convicted hedge-fund titan Raj Rajaratnam will likely appeal the record penalty handed down by the Securities and Exchange Commission last week on civil insider trading charges, FOX Business Network has learned. The penalty, imposed by Federal Judge Jed S. Rakoff, ordered Rajaratnam to pay the SEC a $92.8 million penalty, the largest ever levied in an insider trading case brought by the commission. The Rajaratnam defense team will likely argue the amount is onerous based on its client’s actual net worth, which is far lower than the billionaire status reported in various media reports. “Raj is worth nowhere close to $1 billion,” said one person with direct knowledge of the matter. “This will significantly impact him.”
Carl Icahn’s Icahn Capital disclosed on November 14th for its insider purchase of 250 thousand shares in Tropicana Entertainment Inc. (TPCA). The Form 4 filing shows Carl Icahn bought the shares at $14.3 per share on November 10th, and now takes 16.47 million shares in TPCA, giving a nearly 62.6% activist stake. Previously Carl Icahn reported 16.22 million shares or 61.65% activist stake in TPCA at the end of August. So this is just a small expansion in his position. Now TRPA had lost 5% in 2011, and is trading at $14.5.
Japanese camera maker Olympus Corp. may have used investments with a well-known Bermuda hedge fund to hide more than US$1 billion in investment losses. A former Paine Webber banker told Reuters that his former firm helped craft so-called “tobashi” schemes to allow Olympus to hide huge losses from the collapse of Japan’s economy in the 1990s. Among those techniques were a series of investments with Olympia Capital International, brokered by Paine Webber. According to the banker, who wished to be unidentified, Olympus invested hundreds of millions of dollars with Olympia. Generally investments were made in the closing days of Olympus’ fiscal year, and usually earned Olympus a 33% dividend. But rather than reporting that return, Olympus would book its investment at cost and use the profit to offset older investment losses.
Kenneth Griffin’s Citadel Investment Group Raised Stake in MDC Holdings (InsiderMonkey)
Kenneth Griffin’s Citadel Investment Group raised its stake in MDC Holdings Inc. (MDC). According a SEC 13G filing on November 15th, Ken Griffin now takes approximately 2.69 million shares, corresponding to a 5.7% passive stake. Ken Griffin had about 18 thousand shares in MDC in the second quarter and 1.47 million shares at the end of the third quarter. It’s possible that Ken Griffin began to expand his position in early October. Now MDC is trading at $18.81, losing 32% so far in 2011.
Philip Goldstein is heading to the U.S. Supreme Court. The Bulldog Investors founder, stymied in the Massachusetts courts in his effort to have a three-year old fine overturned, will appeal the case to the Supreme Court, his lawyer, Andrew Good of Boston firm Good & Cormier, told FINalternatives. Massachusetts Secretary of the Commonwealth William Galvin fined Bulldog for providing information about itself to a non-accredited investor. Goldstein, who has engaged in a war of words with Galvin, said that was a violation of Bulldog’s First Amendment right to free speech.
Only 1% of the 77 hedge fund managers surveyed by MHP Communications in 2011 are active on Twitter and none has a wall on Facebook. That said, 79% of the managers, each of which has at least US$1 billion in AUM, had a presence on LinkedIn (although only 23% were active), and only 8% were without a corporate web site. MHP concludes that hedgies are “ignoring social media.” Said Martin Forrest, director, asset management and author of the MHP Survey 2011: “The findings did not surprise us. Historically, hedge fund managers have deliberately kept a low profile and managed their reputations accordingly. They are also concerned about the regulatory implications of social media. As such, adoption of social media is extremely low.”
Dymon Hires Ex-Brevan Howard’s Raman as Fund Hits $1.9 Billion (SFGate)
Dymon Asia Capital, the fastest- growing hedge fund in Singapore, hired a former Brevan Howard Asset Management LLP portfolio manager as assets rose to about $1.9 billion last month. Rajesh Raman, who previously managed an Asian macro portfolio for the Brevan Howard Master Fund and subsequently became an adviser to the fund, will join Singapore-based Dymon as a managing director in December, the 40-year-old said in an interview. He will primarily focus on trading foreign exchange and rates, Raman said.
Italian Police Raid Ex-Hedge Fund Manager Micalizzi (Reuters)
Italian police have raided two properties and launched a fraud investigation into ex-fund manager Alberto Micalizzi, whose hedge fund collapsed during the credit crisis losing investors hundreds of millions of dollars. Milan public prosecutor Alfredo Robledo told Reuters that finance police on Tuesday took away documents and computers from the home and office of Micalizzi, a researcher at Milan’s prestigious Bocconi University and an expert in options pricing. A Reuters investigation into Micalizzi’s fund, DD Growth Premium, revealed in August that its main investment — $500 million of highly illiquid bonds — had been issued by a company in a trailer-park suburb of Phoenix, whose head was on the run from U.S. authorities. Reuters also found that the bonds were backed by a global network of shell companies that included a Spanish-based charity, the International Charitable Christian Fund, whose Russian head Vladimir Kobzar had allegedly been convicted for fraud.
Och-Ziff Shares Tumble on Stock Offering Plans (Businessweek)
Shares of Och-Ziff Capital Management Group tumbled on Wednesday after the hedge fund manager announced plans for a stock offering that analysts expect could dilute the company’s earnings by around 7 percent. THE SPARK: The New York-based company said after markets closed on Tuesday that it plans to raise $250 million in a public offering of its shares. Och-Ziff owes about $622 million in outstanding debt on a loan due next July, and proceeds from the stock offering will be used to pay a portion of that total. It will repay the remainder of that loan with a new loan agreement that allows borrowing of up to $391 million and is due in 2016.
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