FBI Runs ‘Perfect Hedge’ To Nab Inside Traders (Bloomberg)
The two men, head of securities and commodities fraud units at the New York office, faced a dilemma. Informants had told them the hedge fund industry was similar to organized crime: insular and distrusting of outsiders. Without people on the inside, the government would have a tough time gathering enough evidence to prosecute. They needed more tools to gather more information on traders who move faster, and more secretly, than your typical Mafia soldier. At that moment, “Perfect Hedge” was born. This is the behind-the-scenes story of that historic, sprawling, nationwide insider-trading initiative by those who ran it. “We coined this investigation ‘Perfect Hedge’ because if you’re armed with that insider’s information, you can initiate the perfect hedge,” Chaves said in an interview. “You’re always protected — the upside and the down side.” “We identified the problem, we created the solution to infiltrate the industry and we put people in well-placed hedge funds who reported to us on a daily basis,” said Chaves.
Hedge-Fund Refuge Sought By Traders Amid Bank Cuts: Commodities (Bloomberg)
Damien Bombell left JPMorgan Chase & Co. (JPM) a year ago and has his own hedge fund now. He’s hiring four people before accepting money from investors next month. Traders in energy, metals and agriculture are opening or joining hedge funds after leaving financial firms that cut more than 233,000 jobs this year, data compiled by Bloomberg show. George “Beau” Taylor started a hedge fund in February. It now has more than $1 billion of assets. Tim Jones started a metals hedge fund in July at RK Capital Management…
Inside Capitol, Investor Access Yields Rich Tips (WSJ)
When Senate Democrats finally brokered a compromise over the proposed health-care law, a group of hedge funds were let in on the deal, learning details hours before a public announcement on Dec. 8, 2009. The news was potentially worth millions of dollars to the investors, though none would publicly divulge how they used the information. They belong to a select group who pay for early, firsthand reports on Capitol Hill. Seeking advance word of government decisions is part of a growing, lucrative—and legal— practice in Washington that employs a network of brokers, lobbyists and political insiders who arrange private meetings.
Hedge Fund Alarm Bells Are Ringing Over China (FT)
The past few weeks have seen China loom large in the nightmares of many hedge fund managers still smarting from a less-than glory-filled 2011, as concerns rise over increasingly negative economic signals emanating from the country.
Copia Capital, Led By Frontpoint Vet Flannery, Launching Second Fund (AR)
Copia Capital, the $300 million Chicago firm that spun out of FrontPoint Partners last year, will launch a long/short energy-focused equity fund in the first quarter of 2012 that employs a similar strategy to its existing market-neutral fund, a person familiar with the firm’s plans said. The firm, headed by Tim Flannery, has been quietly incubating the strategy since the beginning of the year with $5.5 million of partners’ money.
Private Equity Firm Crown Ocean Beats Commerzbank In Court (FINalternatives)
A private equity firm has won a ruling that would force a Commerzbank unit to pony up payments it had stopped on profit certificates. The victory, on appeal, by Crown Ocean Capital, is the second time Commerz-owned Eurohypo has been defeated on the issue in the German courts. Earlier this year, hedge fund QVT Financial also won a ruling on the matter.
Eurekahedge: Hedge Funds Down 0.87% In November (FINalternatives)
Hedge funds recorded marginal losses in November—the Eurekahedge Hedge Fund Index was down 0.87% for the month—as investors withdrew $9.4 billion and performance-based losses cost the industry another $0.5 billion. Hedge funds were able to provide “significant” downturn protection, however, during a volatile month that saw the MSCI World Index tumble almost 10% before closing down 3.22%. Year-to-date, the Eurekahedge Hedge Fund Index is down 3.78%, amid continuing market uncertainty. Risk aversion remained high in November, with Eurozone fears dominating investor sentiment. European hedge funds witnessed their seventh straight month of net outflows, losing $3.5 billion in November, for a total of $30 billion YTD.