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Hedge Fund News: Bruce Berkowitz, Credit Agricole, Hedge Fund Fraud

Fairholme’s Bruce Berkowitz To Be Chairman At St. Joe (Forbes)
A spokesperson for St. Joe verified that Berkowitz will become chairman just days after the company announced he would rejoin the board, with a formal announcement likely Monday. His deputy Charlie Fernandez will serve as vice chairman while former Florida Governor Charlie Crist, another Fairholme nominee, will chair the board’s governance and nominating committees. As CNBC reported, the company is also eliminating a poison pill adopted in February that was widely seen as a way to stifle an effort by Berkowitz, who owns about 29% of the company, to exert sway over board seats.

FAIRHOLME (FAIRX) Bruce Berkowitz

Credit Agricole Said to Be in Talks to Sell Stakes in LBO Funds (Bloomberg)
Credit Agricole SA (ACA), France’s third- largest bank, is in talks to sell about 500 million euros ($700 million) of stakes in leveraged buyout funds to Coller Capital Ltd., three people with knowledge of the matter said. Credit Agricole acquired the assets in an effort to boost lending to leveraged buyout firms, said the people, who declined to be identified because the talks are private.

Connecticut Hedge Fund Manager Pleads Guilty to Fraud (Bloomberg)
Francisco Illarramendi, a hedge fund manager in Connecticut, pleaded guilty to fraud and two other men were charged with conspiracy in a U.S. probe of an alleged Ponzi scheme with potential investor and creditor losses of hundreds of millions of dollars, prosecutors said. Illarramendi, 42, pleaded guilty today in federal court in Bridgeport to two counts of wire fraud and one count each of securities fraud, investment-adviser fraud and conspiracy to obstruct justice, said U.S. Attorney David Fein in Connecticut in an e-mailed statement. The plea couldn’t be confirmed immediately in electronic court records. John Gleason, an attorney for Illarramendi, declined to comment.

BlackRock, JP Morgan Plan ETFs with Physical Holdings of Industrial Metals (II Magazine)
Since its launch in 2004, the SPDR Gold Shares exchange-traded fund has enjoyed miraculous success in attracting investors. In just seven years it has ballooned to a market capitalization of $54.2 billion, becoming the second-largest ETF in the 1,100-fund ETF universe, behind only the venerable SPDR S&P 500 Trust. Now investment firms are betting that the same logic behind SPDR Gold Shares — creating an ETF with physical holdings of metal instead of futures contracts — can be repeated with industrial metals like copper. But analysts are raising concerns that large-scale hoarding of metals widely used by industry could shrink scarce supplies and drive up prices. “How much material is available to the market has been the key driver of price,” says Daniel Major, a commodities analyst with Royal Bank of Scotland Group in London. “If you remove a lot of that material, it has the potential to have an impact on fundamental supply and demand.”

Loch Capital Said to Have Closed Its Funds After FBI’s Raid in November (Bloomberg)
Loch Capital Management LLC, one of four hedge funds raided by the Federal Bureau of Investigation in November, closed its funds at the end of 2010, according to a person familiar with the situation. Loch Capital has since returned assets to investors and laid off its employees, according to the person, who asked not to be named because the firm is private. …Timothy McSweeney and Todd McSweeney, the twin brothers who run the firm, are not the focus of the investigation, the firm said in the letter. Leonard Pierce, a lawyer representing Loch, declined to comment on the fund’s closure. Three of the four hedge funds raided by the FBI in November — New York-based Level Global Investors LP, Barai Capital Management LP of New York and Loch — have closed their funds.

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