The hedge fund manager who challenged the US wireless broadband connectivity system by launching a cheaper alternative has been under investigation by the SEC for alleged manipulation of bond prices and favoring certain clients over others. The SEC said that Philip Falcone, through his hedge fund Harbinger Capital Partners LLC, had “fraudulently obtained $113.2 million from a hedge fund that he advised and misappropriated the proceeds to pay his personal taxes.” Falcone took out a loan against his hedge fund in 2009.
Ex-Goldman Partner Chan Named Dymon CEO As Hedge Fund Grows (Bloomberg)
Dymon Asia Capital (Singapore) Pte, the best-performing large hedge fund in Asia in 2011, hired a former head of macro trading at Goldman Sachs Group Inc. (GS) as chief executive officer, strengthening its interest-rate trading. David Chan, 41, will also be a partner of Singapore-based Dymon, said founder Danny Yong. Chan, who headed macro trading at Goldman in Asia, will focus on managing the investment team, Yong said. The appointment is subject to regulators’ approval.
Ex-JPMorgan Trader Feldstein Biggest Winner Betting Against Bank (Bloomberg)
Andrew Feldstein, who bet against JPMorgan Chase & Co. (JPM) before helping the bank unwind more than $20 billion of trades, has emerged as one of the biggest winners among hedge-fund managers profiting from a flawed strategy. The $4.3 billion flagship fund of Feldstein’s BlueMountain Capital Management LLC returned 9.5 percent this year through June 22, according to a person familiar with the data. That’s up from the 5.4 percent return before JPMorgan announced a $2 billion loss by one of its traders known as the London Whale. BlueMountain, which was on the other side of those wagers, stands to make as much as $300 million, said market participants familiar with the trades.
Hedge Fund ETF: Take the Edge Off (InvestingDaily)
Investors are worried that the global economy could soon be headed for another recession, and those fears have once again inspired a “risk-off” mentality in the markets. Anxious investors are increasingly looking for ways to insulate their portfolios from market volatility, so they’re turning to exchange- traded funds (ETF) that use a mix of alternative investment strategies to achieve that end. IQ Hedge Multi-Strategy Tracker ETF (NYSE: QAI) employs a hedge fund-like investment strategy that may not be impressive from a total-return standpoint, but is notable for its ability to limit volatility.
Hedge fund-of-funds assets plunge 20.4% over 5 years (Pionline)
Assets invested in hedge funds of funds declined 20.4%, or $233 billion, to $910 billion in the five years ended March 31, according to analysis from database provider eVestment Alliance. The decline in hedge funds-of-funds assets was even steeper — down 36% — from the industry’s peak of $1.421 trillion at the end of the second quarter 2008. By contrast, hedge funds-of-funds assets were up $19.8 billion for the quarter ended March 31 despite net outflows of $7.3 billion, due “primarily to performance gains,” eVestment Alliance’s report said.
Hedge funds boost bets against the euro (Reuters)
Large hedge funds increased their bets against the euro last week as investors viewed the two-day European Union summit in Brussels with skepticism. The funds boosted their short position against euro futures to $20 billion in the latest week from $17.9 billion in the previous week, according to an analysis in Hedge Fund Monitor, a report compiled by analysts with Bank of America.
SEI Named Hedge Fund Administrator of the Year by Global Investor Magazine (Sys-Con)
SEI (NASDAQ: SEIC) today announced that it was named “Hedge Fund Administrator of the Year” at the 2012 Global Investor Awards, held in London on June 28. The award, presented by Global Investor magazine, is the latest in a series of awards recognizing SEI’s leadership and technology in providing enhanced data services and operational outsourcing services to the investment management industry worldwide. “We’re honored to be recognized by Global Investor as Hedge Fund Administrator of the Year,” said Steve Meyer, Executive Vice President and Head of SEI’s Investment Manager Services division.
BofAML: Hedge Funds Shed 1.38% In Q2 (Finalternatives)
Hedge funds were down 1.38% in the second quarter of 2012 according to the Bank of America Merrill Lynch investable hedge fund composite index. Hedge funds outperformed the S&P 500, which was down 5.44% quarter to date. According to the latest BofAML Hedge Fund Monitor, CTA Advisors (up 0.99% QTD) and macro strategies (up 0.46% QTD) were the best performers in the second quarter and the only strategies to end in the black.
Hedge Funders Einhorn, Shak Alive in Richest-Ever Poker Tournament (Observer)
Hedge fund manager David Einhorn is playing cards right now in what is apparently the biggest poker tournament ever, and if you’re one those people who likes watching others gamble, or can’t get enough news of the Greenlight Capital founder—you can watch the livestream here. The 48 participants in the World Series of Poker’s Big One for One Drop put up $1 million to enter the tournament, with about 11 percent of each player’s buy-in supporting a nonprofit organization that seeks to provide access to clean water. Organizers say the first prize of more than $18 million is the richest-ever pool for a poker tournament.
How Will the JOBS Act Impact Hedge Fund and Private Equity Marketing (SBWire)
At its core, the JOBS Act included “Title II – Access to Capital for Job Creators.” This provision lifted an 80-year-old prohibition on general advertising by private equity funds and hedge funds. For financial marketers who once had to operate clandestinely, the JOBS Act adds more flexibility, opportunity, and freedom compared to the Securities Exchanges Commissions draconian policies. Tripp Kyle, a partner at the public relations firm Brunswick Group, said, “I think it presents a real opportunity for firms to evolve their mind-set from what they can’t do to what they can and perhaps should be doing.”
Investors back Ucits hedge multi-manager model in theory, if not in practice (InvestmentEurope)
Investors in Ucits hedge funds overwhelmingly believe in the fund of funds model for investing their vehicle type, but it is not clear they are putting their money behind them, as 40% of the products hold €20m or less. In surveys of the offshore hedge fund industry, investors typically say between $50m and $100m is the minimum size for a workable hedge fund, and funds of funds need more to spread their risk adequately between funds, and conduct due diligence, among other expenses.
The Chinese Wants to Replicate Guernsey’s Funds Sector (HedgeFund)
The Chinese government is so impressed by the way British island Guernsey regulates its hedge funds that it plans to replicate that system for its own funds sector. Investment Europe reported that the Shanghai Municipal Services Office has enlisted Guernsey-based firm International Administration Group to help the Chinese government better understand and regulate its private equity and hedge fund firms.
Dallas hedge fund Becker Drapkin takes control of four board seats at retailer Tuesday Morning Corp. (DallasNews)
A Dallas-based hedge fund has gained control of four board seats at Tuesday Morning Corp. signaling more changes ahead following the firing last month of CEO Kathleen Mason. Becker Drapkin Management L.P. said Monday it has appointed its co-founder and partner Steven R. Becker and Navarare Corp. CEO Richard S. Willis to the retail company’s board effective immediately. The hedge fund, which owns 5.7 percent of Tuesday Morning shares, has control of two more seats. One will likely be a new chief executive officer. Becker is chairing the board’s nominating and governance committee and so will be leading the search.
Blackstone Group Expands its Advisory Unit (HedgeFund)
New York-based hedge fund and private equity firm Blackstone Group has expanded its investment advisory division through the appointment of a senior executive. As the senior managing director, Jan Weidner will be based in Germany and will be responsible for the German-speaking franchise for Blackstone Advisory Partners, according to a company statement.
Liquidity concerns driving multi-asset managers (MoneyManagement)
Fund-of-hedge-fund (FOHF) and multi-strategy managers are tailoring their products to provide investors with improved protection in negative markets, according to Standard & Poor’s Fund Services (S&P). According to S&P’s report on the alternative strategies/multi-asset peer group, investor demand is “inextricably tied to the performance and flight-to-liquidity issues that arose in a difficult 2011”.
Factorial Management implements integrated portfolio and risk management system (Opalesque)
Hong Kong based pan-Asia multi-asset hedge fund firm Factorial Management Limited has announced the implementation of its integrated portfolio and risk management system for its flagship fund, Factorial Master Fund. Barun Agarwal, Chief Investment Officer of Factorial disclosed that the firm uses Imagine Software’s risk management solution for its system, including its core front, middle and back office system.
Elliott Management sells MF Global stake-source (Reuters)
Paul Singer’s Elliott Management has resigned from a committee of MF Global Holdings Ltd creditors after selling its position in the bankrupt commodities broker, according to a source close to the matter. U.S. Trustee Tracy Hope Davis, a regulator charged with ensuring compliance with bankruptcy laws, on Monday filed court papers revealing Elliott had been replaced on the committee with Nebraska-based grain company JE Meuret Grain Co Inc.
Apple’s Reliance on China Just Increased (TheStreet)
Apple(AAPL) has demonstrated that it doesn’t need help selling iPads, but it still received some very beneficial news in that regard on Monday. The company finally settled its long-running dispute with Proview Technology over the iPad name in China. As part of the agreement, Apple has agreed to pay $60 million to Proview.
Prop shops face start up woes (FierceFinance)
The Volcker Rule was expected to lead to a stream of prop traders leaving the bulge bracket banks to set up their own shops. That trend played out as expected for the most part. The surprise has been the outcome, as not a lot of these prop-trader-created hedge funds have panned out. Traders Magazine notes that many of these funds are now having trouble raising capital. Many ex-prop traders may have underestimated the difficulty in this endeavor.
BlackRock To Buy Swiss Re Infrastructure-Investments Unit (Bloomberg)
BlackRock Inc. (BLK), the world’s largest asset manager, will buy Swiss Re Ltd. (SREN)’s Private Equity Partners AG for an undisclosed amount to extend its investments into infrastructure. Swiss Re’s $7.5 billion European private equity and infrastructure fund of funds unit will be integrated with BlackRock’s existing business, the New York-based firm said today in an e-mailed statement. Those funds include a “significant” commitment from Swiss Re.
Money can buy you luxury (AsiaOne)
Celebrity hairstylist Addy Lee spends three weeks every month abroad, primping the coiffures of the rich and famous. But whenever the CEO of Monsoon Hair Group is in Singapore, you will find him hanging out at his swanky Sentosa Covepad. His three-room apartment sits within Singapore’s resort-playground for the rich.
Nomura Dropped From DBJ Bond Sale Due To Insider Leak Case (Bloomberg)
Nomura Holdings Inc. (8604), Japan’s biggest brokerage, was dropped as a lead underwriter for state-owned Development Bank of Japan Inc.’s bond sale this month because of its involvement in leaking insider information. Nomura was replaced by Mitsubishi UFJ Morgan Stanley (MS) Securities Co. on the deal, according to a faxed statement from Mizuho Securities Co. today. DBJ, which had said in May that it had hired Tokyo-based Nomura as well as Daiwa Securities Group Inc. (8601) and Mizuho Financial Group Inc. (8411), today said it made the change to avoid “any disruption” to the offering.
Insight: Green Mountain’s coffee distributor brews controversy (Reuters)
A U.S. Securities and Exchange Commission investigation into the accounting practices of Green Mountain Coffee Roasters is casting a spotlight on M. Block & Sons, a little-known consumer products distributor. The 18-month Green Mountain probe marks the third time in a dozen years that securities regulators have looked at the accounting practices of a company that used Chicago-based M. Block to store and help deliver its products to major retailers.
Check Out Phil Falcone’s Breathtaking St. Barts Estate Mentioned In The SEC Complaint Against Him (BusinessInsider)
Last week, the Securities and Exchange Commission filed a fraud suit against hedge fund billionaire Phil Falcone and his Harbinger Capital Partners. The SEC alleges that Falcone and his fund engaged in “illicit conduct that included misappropriation of client assets, market manipulation and betraying clients,” the release said.
Sumitomo Mitsui Trust Bank buys Daiwa Global Asset Services (Opalesque)
Daiwa Securities Group Inc (“Daiwa”) has signed a sale and purchase agreement with Sumitomo Mitsui Trust Bank, Limited (“SMTB”), to transfer its Global Asset Services Division to them. The Global Asset Services Division comprises Daiwa’s Fund Administration/ UCITs Management Company, Custodian, Trustee and Authorized Corporate Director entities domiciled in Ireland, UK and Cayman servicing clients across the globe, including the activities in Hong Kong. This transaction is subject to the customary regulatory approvals.
M&A activity light in the first half of 2012 (Opalesque)
Despite a slight upswing in M&A activity in North America last quarter, overall transaction volume is down for the first half of 2012. Research from US-based financial services firm Freeman & Co. cites continued European distress and global deleveraging as causes for keeping deal volume down. The findings are corroborated by similar research released by Thompson Reuters today. Mergers and acquisitions activity was up 10% in North America last quarter after three straight quarters of decline, according to Ernst & Young’s quarterly tracker of M&A activity. Whereas overall activity was down 17% in the Eurozone countries as concerns over regional debt and tumultuous elections continue to keep money on the sidelines.
SEC Freezes Assets of Missing Georgia-Based Investment Adviser (SEC)
The Securities and Exchange Commission today obtained a court order to freeze the assets of a Georgia-based investment adviser who has apparently gone into hiding after orchestrating a $40 million investment fraud. The SEC alleges that Aubrey Lee Price raised money from more than 100 investors living primarily in Georgia and Florida by selling shares in an unregistered investment fund (PFG) that he managed. Price purported to invest fund assets in traditional marketable securities, but he also made illiquid investments in South America real estate and a troubled South Georgia bank.
The Daily Docket: Lehman Sells Aurora Bank (WSJ)
Lehman Brothers Holdings Inc. said Friday it has sold its Aurora Bank FSB subsidiary, a move that should help funnel some $1.5 billion into the pockets of Lehman’s creditors. A hedge fund manager is demanding that the trustee unwinding the brokerage of Lehman Brothers use more than $3 billion in its reserves to quickly make payments to customer claimants, saying the trustee’s “aspirational date” to pay those claims keeps slipping “further and further into the future.
Hedge Fund Survey: Smarsh Report Reveals Challenges in Oversight of Electronic Communications (HedgeCo)
The survey of more than 200 compliance professionals in the hedge fund industry was conducted to better understand the attitudes and current practices for electronic communication compliance. “This year’s survey findings illuminate the shifts underway related to electronic communications compliance,” said Stephen Marsh, CEO and founder of Smarsh. “The retention and oversight of electronic communications has becoming increasingly complicated as employees are presented with a growing number of options to communicate—from instant messages and mobile devices to websites and social collaboration tools—and compliance officers must adjust quickly and comprehensively to mitigate risks to their firms.”
Level Global Co-Founder, Two Others To Face Trial Together (Finalternatives)
Three accused hedge fund insider-traders will stand trial together in October. Level Global Investors co-founder Anthony Chiasson, former Diamondback Capital Management trader Todd Newman and former SAC Capital Advisors analyst Jon Horvath were arrested in January as part of the government’s ongoing insider-trading crackdown. According to federal prosecutors, the three men were part of a “criminal club” that made more than $60 million in illegal profits, including a single $53 million profit on Dell Inc. shares that is the “largest single trade ever charged in the Southern District in an insider-trading case.”
Chief Executive of Barclays Resigns (NYTimes)
Robert E. Diamond Jr., the chief executive of Barclays, resigned on Tuesday, less than a week after the British bank agreed to pay $450 million to settle accusations that it had tried to manipulate key interest rates for its own benefit. Mr. Diamond’s resignation, which was effective immediately, comes after mounting criticism of the bank’s actions from politicians and shareholders.
US fines Glaxo record $3bn for mis-promoting drugs (Telegraph)
The historic penalty came as Britain’s biggest drugmaker admitted to mis-promoting two medicines, Paxil and Wellbutrin, in the US between 1998 and 2003. The settlement also saw Glaxo admit that it failed properly to report all the necessary safety data to US regulators concerning Avandia, a diabetes drug, between 2001 and 2007. The settlement ends a seven-year investigation into Glaxo’s mis-promotion of medicines in the US, which is the company’s largest research centre after Britain and home to almost a fifth of its 100,000 employees. Glaxo warned shareholders last November that it had put aside more than £2bn to pay for the settlement.
Chase Carey would be News Corp CEO in a perfect world, investor says (Telegraph)
“In a perfect world we would have liked to see Chase Carey in the CEO role and Rupert move up to the chairman role,” said Kevin Holt, a senior fund manager at Invesco, News Corp’s largest shareholder after Saudi Prince Alwaleed bin Talal and the Murdoch family. “Chase Carey’s involvement in this company is very important to our ownership.” Mr Carey, who is highly regarded on Wall Street for his experience in the television business, is currently News Corp’s chief operating officer.
This Is A Story About A Guy Telling A Random Dude On The Street “I’m actually building a hedge fund that uses quantitative strategies to pick stocks” And That Dude Actually Being Jim Simons (DealBreaker)
Something we’ve long-maintained around the Dealbreaker office is that hedge fund manager Jim Simons would make a great fairy godmother, what with his soothing voice, white beard, and the fact that he’s really just a lovable math teacher who happened to make a zillion dollars by tinkering away the computers in his garage and would be happy to lend the powers of his magic cigarette wand to those in need. So we were extremely pleased to see our fantasy brought to life by way of an anecdote from Scott Patterson’s new book Dark Pools, in which Simons seems to appear out of nowhere, just like a FGM would, sprinkles unexpected gifts on a young man and woman (of both hope* and nicotine), and then disappears as quickly as he came via golden carriage.
Misjudging Tennessee (WSJ)
George Soros-funded groups like Justice at Stake have been pushing to expand the so-called Missouri plan of judicial selection to new states, but so far things are moving in the opposite direction. In Tennessee, lawmakers took a huge step toward junking the system entirely when they approved a constitutional amendment in April to move the state into a modified version of the federal method. Now, the lawyers groups who have dominated the Tennessee system are getting nervous, and pulling out the …
Jim Rogers Prediction: America Will Certainly Go Through A Period Of Default (GLD, SLV, IAU, AGQ, PHYS) (ETFDailyNews)
13-year host Rick Wiles and famed investor Jim Rogers of Rogers Holdings discussed many of the same topics Rogers’ is asked to update from time to time, on many programs, including the gold market, Europe’s woes, the US dollar, and the economic outlook of Asia. But Rogers ended the interview with a bang, taking on the controversial subject weighing on a growing number of Americans: Is the US headed into an extreme social/political catastrophe? And by implication, should Americans head for the exits?
Graves have their own way of touching us (ADN)
My friend Jim Rogers explains the psychological value of graves to the living this way. “A grave is a place to walk to and a place to walk away from.” This is concise way of saying — a place to pay tribute to the dead, then return to the living. With cremation now common, there are fewer graves to walk to and from. You don’t hike to the base of Mount McKinley and meditate on grandpa’s ashes scattered at 18,000 feet. I have visited cemeteries for 40 years, often as a tourist come to pay tribute.
Eastman completes acquisition of Solutia (News-Journal)
Eastman Chemical Co. on Monday said it has completed its previously announced acquisition of Solutia Inc. The approximately $4.8 billion acquisition supports Eastman’s growth strategy to increase revenues and profit margins by expanding the company’s geographic reach, especially in emerging markets, and establishing a more diverse and sustainable product portfolio, according to Jim Rogers, chairman and CEO of Eastman.
Carl Icahn: ‘Chesapeake Is A Very Undervalued Company’ (BusinessInsider)
Carl Icahn told CNBC that embattled natural gas giant Chesapeake Energy remains a “very undervalued company” and that he is in no way ready to sell his recently purchased 7.5 percent stake in the firm. Icahn’s interview came as Reuters reported the Justice Department had opened an inquiry into possible bid-rigging Chesapeake engaged in with Canadian company Encana over land deals in Michigan.
