SEC Charges Hedge Fund with Insider Trading, Inflating Fund Returns (MarketWatch)
The Securities and Exchange Commission settled charges on Tuesday with Visium Asset Management LP, a New York-based hedge fund advisory firm, for insider trading by its privately managed hedge funds and portfolio managers and inflating fund returns by mismarking assets values. The firm’s CFO, Steven Ku, also agreed to settle charges that he failed to respond appropriately to red flags that should have alerted him to the asset mismarking. Visium agreed to settle the SEC’s charges by disgorging illicit profits totaling more than $4.7 million plus interest and paying a penalty of more than $4.7 million.
Soros Fund Management Hires ex Citadel Trader: Sources (Reuters)
BOSTON (Reuters) – Lucy DeStefano, former head of trading at hedge fund Citadel’s Aptigon unit, is set to join Soros Fund Management later this year, two sources familiar with the matter said. Soros Fund Management is the $26 billion family office of billionaire philanthropist George Soros, and the firm’s investments as well as its staffing decisions are closely watched in the $3.2 trillion hedge fund industry. At Soros, DeStefano will report to head of trading Jessica Murphy and join the firm’s trading team to focus on systematic trading strategy for macro investments.
ValueAct Builds $1.2 Billion Stake in Undervalued Citigroup (Bloomberg)
Activist fund ValueAct Capital Management has amassed a $1.2 billion stake in Citigroup Inc., arguing that the bank long seen as trailing its sector is positioned for success by providing the “plumbing” that multinational corporations need to operate. Jeff Ubben’s San Francisco-based hedge fund, which disclosed a $75 million stake in the bank in February, has been building those holdings over the past four or five months, according to a quarterly investor letter obtained by Bloomberg Monday. ValueAct said it’s continuing to add to its position. “Based on the share price at which we have been able to accumulate our stake in the company, we do not believe the market views Citigroup in the same way we do,” ValueAct said in the letter.
Hedge Funds are Beating the Market For the First Time in 10 Years (CNBC)
After nearly a decade of underperformance, hedge funds are actually faring better than the stock market in 2018. Thanks to higher volatility, the rally in energy prices and some well-placed bets in fixed income, managers in the $3.2 trillion hedge fund industry posted a 0.38 percent gain in April that brings the total return for the year to 0.39 percent, according to industry tracker HFR. The HFRI Fund Weighted Composite Index finished April narrowly ahead of the S&P 500, which posted a loss, including dividends, of 0.38 percent through the first four months.
British Hedge Fund Caius Challenges Capital Treatment of UniCredit Notes (Reuters)
LONDON/MILAN (Reuters) – British hedge fund Caius Capital has asked the European Banking Authority (EBA) to open an investigation into the regulatory treatment of a complex financial instrument as UniCredit’s (CRDI.MI) core capital. In a May 3 letter seen by Reuters, Caius asked the EBA to examine a 2.98 billion euro ($3.46 billion) convertible bond issued in 2008, which it said had been misclassified as Common Equity Tier (CET) 1, or the best-quality capital held by a bank and a key measure of its financial strength. Reclassification would reduce UniCredit’s CET 1 ratio by about 50 basis points, a source familiar with the fund’s thinking told Reuters.