New York (HedgeCo.Net) – For the fourth consecutive year, Eze Castle Integration has surveyed a section of the investment management community to understand the systems and service providers funds are working with to achieve these best practices and attract investors.
Eze Castle Integration surveyed 279 firms worldwide – across the United States, United Kingdom and Asia. The majority of respondents classified themselves as hedge funds (58%). Other firm types surveyed included investment/asset manager (13%), private equity firm (3%), fund of fund (3%), and family office (3%). Additionally, 13 percent fell into an “Other” category which included financial firm types such as venture capital, advisory, fund management, quant and wealth management.
Market Data & Analytics: Bloomberg continues to lead the pack (96%) as far as market data services and analytics in the financial industry.
Front Office: The majority of firms rely on Eze Software Group’s Eze OMS, followed by Bloomberg’s Asset and Investment Manager (AIM), RediPlus EMS and Advent’s Moxy.
Research & Document Management: The majority of respondents reported that they outsource the responsibility of managing research materials and documentation. Forty-three percent (43%) of firms are using in-house or proprietary solutions. For those firms using a specific tool, Microsoft’s SharePoint, Advent’s Tamale, or Code Red RMS are the most common.
Portfolio Accounting: Advent Software continues to be the primary leader in regards to portfolio accounting with its Geneva and APX solutions remaining the top two choices among investment firms surveyed.
Risk Management: Adoption of risk management solutions is still slow as a reported fifty-six percent (56%) are not using solutions to mitigate portfolio risk. For those firms that do have a formal solution in place, popular vendors utilized include Advent, Bloomberg, FT Options, Indus Valley, iVolitility, Orchestrade and The Insight.
Outsourced Administration: While not all firms choose to utilize an outsourced fund administrator for more comprehensive services, those that do tend to work with a variety of different vendors. Citco is the top administrator choice among our survey respondents, followed by SS&C GlobeOp, Northern Trust, State Street and JP Morgan.
Customer Relationship Management: In regards to CRM tools, our survey results found that Backstop is the most popular solution, followed by Salesforce.com and Petrac.
Message Archiving: A large majority of survey respondents (57%) are relying on Global Relay for their email and IM message archiving services, followed by Eze Castle’s Eze Archive service, which is powered by Global Relay. Smarsh and Frontbrige round out the top four services.
Mobile Technology: Firms are using BlackBerry (83%) as their primary mobile solution. However, iPhone use has made great leaps and increased from forty-three percent (43%) in 2013 to sixty-four percent (64%) in 2014.
Firms surveyed fell into three asset groups: thirty-three percent (33%) reported their assets under management (AUM) as less than $100 million; twenty-eight percent (28%) fell between $101 and $500 million; and the majority (39%) reported over $500 million AUM.
Columbia Management and Blackstone’s Alternative Asset Management sector are teaming up to research and develop investment solutions that leverage Columbia’s asset management capabilities and Blackstone’s hedge fund solutions business, Bloomberg reports.
“Collaboration with Blackstone will enhance Columbia’s already deep product line-up and should allow us to reach even more investors and distribution partners, both domestically and internationally, with a broad set of alternative investment capabilities,” Columbia said in a press release. “This is an important opportunity to further enhance our offering of alternative investments and solutions-based strategies.”
Columbia Management is a long-term mutual fund with assets of $358 billion under management. Blackstone Alternative Asset Management, Blackstone’s Hedge Fund Solutions platform, is the world’s largest discretionary investor in hedge funds, with $64 billion in assets under management.
Hedge funds are up 3.45% year-to-date with roughly 18% of funds boasting double digit returns for the year, half the number for the same period last year, according to a new Eurekahedge report.
Total net asset flows for 2014 were trimmed to $55 billion for the year as hedge funds saw their fourth consecutive month of net outflows in October, with investors redeeming $20.3 billion over the last four months.
New York (HedgeCo.Net) – Activist hedge fund Sandell Asset Management is taking on oil giant TransCanada, requesting a spinoff of its energy sector and urging the company to take advantage of a low tax paying affiliate.
“Although we are excited about the recent positive developments at TransCanada, we are disappointed that the Company has neither fully embraced the Master Limited Partnership structure nor emphasized cash flow metrics such as Adjusted Funds From Operations to highlight the Company’s ample tax assets, low maintenance capital requirements and capacity for dividend payment.” Tom Sandell, CEO of Sandell, said. ”Furthermore, we believe a spinoff of the Energy segment is the best long term course for this asset to attract a world-class, dedicated management team to deal with upcoming opportunities and challenges within the sector and to highlight the premium value of the Pipeline business.”
The NYT reports: ”Sandell first reached out to the energy company about three months ago, discussing matters like its corporate strategy, according to people briefed on the matter. But TransCanada executives said they were largely content with the current layout of the business. While the exact size of the hedge fund’s stake is unclear, Sandell plans to say it has a “significant” stake in the energy company. TransCanada’s market value as of Friday was about $35 billion.”
TransCanada is currenty working on the Coastal GasLink Pipeline Project and the Keystone Pipeline Project, which will transport crude oil from Hardisty, Alberta to U.S. Midwest markets at Wood River and Patoka, Illinois; Cushing, Oklahoma and the Gulf Coast.
Sandell also published a whitepaper on its strategy: ”Un-TRPing Shareholder Value. (pdf)”
A hedge fund sponsored event, Robin Hood, yesterday concluded its 2nd annual Investors Conference, raising $6 million to support hundreds of the most effective job-training programs, schools, soup kitchens, shelters and other poverty-fighting programs throughout New York City.
“All of us at Robin Hood are extremely grateful for the generosity shown by our sponsors, which is what enables us to contribute 100% of the money raised through Conference ticket sales to hundreds of the best programs throughout the five boroughs that work to help improve the lives of the 1.8 million New Yorkers living in poverty,” said David Saltzman, executive director of Robin Hood. “We couldn’t have asked for a better outcome or for a more successful event.”
For the second year in a row, the Conference was organized by Robin Hood board members David Einhorn, president and founder of Greenlight Capital; John Griffin, president of Blue Ridge Capital; Philippe Laffont, founder and CEO of Coatue Management, and Barry Sternlicht, chairman and CEO of Starwood Capital Group. The two-day Conference featured a packed agenda with legends from the investment and business worlds, as well as many up-and-comers, all of whom provided lively debate and insight into subjects including energy, retail, innovation and technology.
Both days included several popular “Lightning Rounds” and “Best Ideas” forums, where participants – including Larry Robbins, CEO of Glenview Capital Management and Robin Hood board member — presented their thoughts on the best places to invest today and why.
Eric Schmidt, executive chairman of Google said during his remarks on Tuesday that, “Robin Hood is the most efficient and effective nonprofit in America today.”
One of the most highly anticipated panels took place on Tuesday, when Larry Fink, chairman and CEO of Blackrock, Carl Icahn, founder of Icahn Enterprises and Dan Loeb, founder and CEO of the hedge fund Third Point, discussed the role of shareholder activism. In an exchange regarding corporate governance, Larry Fink said, “The financial community has done well, but a lot of people have been left behind. We should be asking the bigger question, `Are the investments we’re making good for society?’”
Over half of the speakers at this year’s Conference were first time participants, including Traci Lerner, president and founding partner of Chesapeake Partners Management Co; Keith Meister, managing partner and chief investment officer of Corvex Management; Joe Lonsdale, founder and managing partner of Formation 8; and Zach Schreiber, chairman, chief executive officer and chief investment officer of PointState Capital.
Tuesday’s Conference session included two surprise presenters: Eli Manning, quarterback for the New York Giants and a member of Robin Hood’s Leadership Council; and Mark Teixeira, first baseman for the New York Yankees and board member of Harlem RBI – a Robin Hood grantee that provides kids from East Harlem with year-round educational and athletic opportunities.
Just in time for the mid-term elections, billionaire philanthropist and retired hedge fund founder Tom Steyer has donated an extra $15 million of his own money in to his super-pac, NextGen Climate Action Fund.
Steyer, an activist and former hedge fund manager has already given nearly $56 million to make climate change a top-tier issue in the midterm elections, the Guardian reports.
In a speech at the Democratic National Convention last year, Steyer said; “During the last several years we’ve seen tremendous progress on new technologies that can make us energy independent and create thousands of jobs. This is about investing for the long haul, not for a quick and dirty buck. This is about control of our destiny by doing what Americans do best – by out-innovating, out-hustling and out-thinking our competitors.”
Steyer also spearheaded a Showtime series ”Years of Living Dangerously” directed by James Cameron. Each episode features celebrity correspondents such as Matt Damon, Harrison Ford, Jessica Alba and Leslie Stahl.
The first episode of “Years Of Living Dangerously” can be seen in full here.
Three other hedge fund managers, Chris Hohn of The Children’s Investment Fund, Jeremy Grantham the founder of GMO, and Steve Mandel of Lone Pine Capital are also joining the ranks of activist hedge fund managers fighting against global climate change.
Where the Republicans have support from the Koch brothers and other oil industry moguls, others who have made their fortune in technology and alternative energy see a Democratic administration as a better alternative.
Stayer also funded an anti Keystone advertisement “Sucker Punch.”
New York (HedgeCo.Net) – RBC Global Asset Management is launching five new Exchange Traded Funds (ETFs) specifically designed to meet the needs of investors and advisors for income, access to international markets and reduced exposure to foreign currency risk. All five ETFs are now available for purchase on the Toronto Stock Exchange.
“Our ongoing discussions with investors and advisors indicated a need for better income-generating solutions that provide international diversification and limit foreign currency risk,” said Mark Neill, head of RBC ETFs. “These new ETFs build upon our successful suite of RBC Quant Dividend Leaders ETFs, which feature a forward-looking investment approach, superior portfolio construction and competitive fees while offering additional global investment opportunities.”
- RBC Quant Emerging Markets Dividend Leaders ETF
- RBC Quant European Dividend Leaders ETF
RBC GAM also announced the launch of three new currency-hedged ETFs:
- RBC Quant U.S. Dividend Leaders (CAD Hedged) ETF (RHU)
- RBC Quant European Dividend Leaders (CAD Hedged) ETF (RHP)
- RBC Quant EAFE Dividend Leaders (CAD Hedged) ETF (RHI)
The RBC Quant EAFE Dividend Leaders ETF is the first and only international dividend ETF available in Canada and it is now available in a currency-hedged option.
The drop was the worst point loss in more than a year and the worst percentage loss since February.
“If you spent the entire summer wishing there was more volatility in the market, your dream has come true,” Art Hogan, chief market strategist at Wunderlich Securities in New York said in an interview with Reuters. “You have multiple global macro concerns, a new Ebola scare, beginning of a new quarter, and on the very short horizon, earnings season starting.”
The Street reports: Asian and European markets were splashed with red ink this morning after Wall Street fall yesterday. Germany is widely thought to be in recession, making the darkening the outlook for recovery for the rest of the Eurozone. France’s industrial figures are less bad than expected, but Italy’s are less good. European Central Bank governor Mario Draghi said at the Brookings Institution in Washington last night that the ECB was ready to take unconventional measures to combat deflation in the Eurozone and called on governments to play their part by implementing structural reforms. But the Germans don’t like some of those measures and it’s not clear governments are able to implement reform. TUI Travel is biggest faller in London on Ebola fears – while mining company Vedanta has to evacuate executives from Ebola-stricken Liberia.
New York (HedgeCo.Net) – Two business associates in the hedge fund management industry have been charged by the FBI with defrauding institutional investors and causing collective losses of more than $311 million.
Helmut Kiener is charged by indictment with four counts of wire fraud, two counts of bank fraud, and three counts of money laundering, based on allegations that he devised and directed various investment fraud schemes in concert with his partner John C. Tausche. Tausche is charged by information with one count of bank fraud and one count of money laundering, based on his alleged involvement in the scheme.
Kiener, a German national, controlled several hedge funds—including K1 Global Limited and K1 Invest—which he marketed to international investors. Tausche, a U.S. citizen, controlled several offshore hedge funds collectively called the Oceanus Funds.
According to the charges, between March 2005 and December 2008, Kiener allegedly devised a scheme to defraud Bear Stearns entities by representing to Bear Stearns that, under Kiener’s management, Bear Stearns investment funds would be diversified and independently managed. However, the indictment alleges that Kiener actually funneled Bear Stearns money from K1 through the Oceanus Funds and back to K1, so as to give the false impression that the funds were growing in size and were viable investments. Kiener and Tausche, it is alleged, knowingly and intentionally fostered the false appearance that the K1 Funds were increasing in value in order to induce Bear Stearns to continue to invest in the K1 Funds.
Both defendants allegedly provided false and misleading information to Bear Stearns in response to inquiries regarding the K1 and Oceanus Funds, repeatedly and falsely representing that the funds were diversified and independently managed. The indictment alleges that, as a result of the scheme, Kiener earned sales agent fees all while Bear Stearns invested and lost approximately $82 million.
The information filed against Tausche alleges a similar scheme against Barclays Bank, involving the K1 Funds and the Oceanus Funds. The information alleges that this scheme caused losses to Barclays Bank of $137 million.
It is further alleged that starting in 2007, Barclays Bank, Bear Stearns, and BNP Paribas (BNPP) invested with Kiener in two offshore funds named Consistent Return Ltd. and Mezzanine Financing Ltd. Kiener represented that both Consistent Return Ltd. and Mezzanine Financing Ltd. were legitimate investment funds, and the indictment alleges that the three institutional investors together invested more than $100 million in these funds. However, the indictment alleges that Kiener actually directed a third party to create these offshore funds and that Kiener then used the funds for his own purposes including, but not limited to, the purchase of: oceanfront real estate in Delray Beach, Florida, valued at over $21 million; a Bombardier executive jet; a Bell helicopter; luxury cars such as a Bentley, a Mercedes, and a Maybach; two luxury watercraft; and more than $8 million in upgrades to his real estate.
If convicted of all charges, Kiener faces a maximum possible statutory sentence of 200 years in prison, restitution, and a maximum possible fine of $7.936 million; Tausche faces a maximum possible statutory sentence of 40 years in prison, restitution, and a maximum possible fine of $1.974 million.
In this four part series, reality TV once again meets the hedge fund world. Two emerging managers have exclusive access to three of the industry’s biggest names for advice, guidance and potential investment. Specific strategies, ambitious pitches and one-to-one discussions culminate in a decision making finale where the Lions impart their industry wisdom.
This season includes Andrew McCaffery, of Aberdeen Asset Management, Ewan Kirk, of CANTAB and Natasha Reeve-Gray, from Altis Partners.
The show sponsors UK charity CHICKS, which provides week-long respite breaks for disadvantaged children from across the UK who would not otherwise have a break in that year, and Futures for Kids, which helps to provide better lives and futures for children.
Barclays Capital Pays $15 Million For Compliance Failures After Acquiring Lehman’s Advisory Business
Barclays Capital has agreed to pay a $15 million penalty and to undertake remedial measures after being charged by the Securities and Exchange Commission with failing to maintain an adequate internal compliance system to ensure the firm did not run afoul of any federal securities laws after its wealth management business in the U.S. acquired the advisory business of Lehman Brothers in September 2008.
Investment advisers are required to adopt and implement written compliance policies and procedures reasonably designed to prevent violations of the Investment Advisers Act and its rules. An SEC examination and subsequent investigation found that Barclays failed to enhance its compliance infrastructure to integrate and support the acquisition and rapid growth of the advisory business from Lehman. The deficiencies in its compliance systems contributed to other securities law violations by Barclays.
“When a firm acquires an advisory business, it must devote the attention and resources necessary to build a robust compliance system,” said Julie M. Riewe, Co-Chief of the SEC Enforcement Division’s Asset Management Unit. “Barclays failed to establish this critical compliance foundation when it acquired Lehman’s advisory business, and as a result subjected its clients to a host of improper practices and inadequate disclosures.”
According to the SEC’s order instituting a settled administrative proceeding, Barclays failed to adopt and implement written policies and procedures and maintain certain required books and records to prevent the other violations. For instance, Barclays executed more than 1,500 principal transactions with its advisory client accounts without making the required written disclosures or obtaining client consent. Barclays also earned revenues and charged commissions and fees that were inconsistent with its disclosures for 2,785 advisory client accounts. Barclays also violated custody provisions of the Advisers Act, and underreported its assets under management by $754 million when it amended its Form ADV on March 31, 2011. The violations resulted in overcharges and client losses of approximately $472,000 and additional revenue to Barclays of more than $3.1 million. Barclays has since reimbursed or credited its affected clients approximately $3.8 million including interest.
In addition to the $15 million penalty, Barclays agreed to retain an independent compliance consultant to internally address the violations. Without admitting or denying the findings, Barclays agreed to be censured and must cease and desist from committing or causing any further such violations.