The founder of Saradha Group, Sudipta Sen, is currently in police custody, following the revelation that his venture fund was nothing more than a Ponzi scheme that is estimated to have duped hundreds of thousands of Indian investors out of billions of dollars.

“Sen’s Saradha Group operated a series of companies that offered ‘depositors’ the ability to invest in a wide range of ventures ranging from real estate to motor vehicles to even bio gas.  Investors were offered the ability to make short-term investments with promised returns based on the duration.” PonziTraker reports. “There are tales of bribes paid to politicians, a factory where workers pretended to work to impress potential investors, and a mastermind so opposed to having his picture taken that his website simply features a picture of an empty chair in his stead.”

Market regulator Securities and Exchange Board of India (Sebi) has launched prosecution in 59 cases of Collective Investment Scheme (CIS), while the ministry of corporate affairs (MCA) is also investigating the Saradha Group.

In other new, Sebi has asked domestic hedge funds to sign an undertaking they will not invest in foreign exchange derivatives as a condition for approving their registration application to reduce speculation in the currency market.

“Allowing domestic hedge funds to participate in the currency derivatives market could add more volatility to the currency market and harm the rupee’s stability.”

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Daniel Loeb wants Sony to spin off part of its entertainment arm that includes a Hollywood movie studio and music business, according to people familiar with the situation. Verification was not immediately available the NYT and Bloomberg report.

Loeb flew to Tokyo and hand-delivered a letter to Hirai supporting his turnaround efforts and seeking more action, the newspaper said. Sony rose 1.2 percent to close at 1,877 yen in Tokyo trading today, extending its gain this year to 96 percent.

Loeb expects that spinning off a portion of the entertainment business could sharpen Sony’s focus and improve profit margins, the newspaper reported. He is also pushing for a spinoff of its insurance unit, the New York times reported.

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Hedge Fund manager Anthony Chiasson, who was found guilty of insider trading charges back in December 2012, was yesterday sentenced to six and a half years in prison by Judge Sullivan, of the Federal District Court in Manhattan.

The Judge was shocked by the hedge fund manager’s annual income listed on his tax returns. “$16 million, $10 million, $23 million. That’s just staggering,” the judge said, according to the NYT. “It’s hard to imagine why someone would risk all that to engage in a crime like this.”

Manhattan-based Chiasson is a co-founder of Greenwich, Conn.-based Level Global Investors. The government said he earned about $50 million illegally by trading on a tip received about Dell Inc. stock in 2008.

He was also was ordered to pay $5 million in fines and to forfeit illegally obtained proceeds of as much as $2 million.

“According to court records, Maiden hid losses in his hedge fund, called the Maiden Capital Opportunity Fund, by routinely sending “bogus account statements” to investors and the fund’s administrator. The fund, founded in 2006, had lost a substantial amount of investor funds by February 2009, but the statements claimed favorable monthly returns.”The Charlotte Observer reported.

Maiden used personal funds as well as funds from other investors to cover investor withdrawals, he has agreed to plead guilty to one count of securities fraud, which carries a maximum sentence of 20 years in prison and up to a $250,000 fine.

The new team, called The Crestline-Kirchner Private Equity Group, has plans to buy and then invest in underperforming hedge funds.

“The universe of U.S. zombie funds – poor-performing private equity funds whose managers have little hope of raising more money – measures about $100 billion in assets.” According to industry estimates cited by the two firms.

W.B. (Bud) Kirchner and Dave Philipp, head of asset management for Kirchner Group will be running the new group.

“This is for us an ongoing business model,” Paul Choy, managing director of Kirchner Group said in an interviw with Reuters. “We replace or complement the GP in underperforming funds, turn them around on behalf of the LPs, accelerate return of capital, and recover value within the portfolio. With the joint venture with the Crestline Investors, we are accelerating and expanding that program.”

Crestline Investors currently has $1.9 billion allocated for “opportunistic investments” which the Crestline-Kirchner Private Equity Group will tap into.

The New York Times reported in 2012 that four years after the onset of the financial crisis, tens of billions of dollars remain locked up in illiquid “zombie” hedge funds that suspended their redemptions in the darkest days of the meltdown.

The New Hedge Fund Study: 2012 Edition, has revealed that 64% of new funds covered by the study had equity or equity-related strategies, up 14% from the 2011 study.

Of the 64% of new funds involved in equity or equity-related strategies, Seward & Kissel found that about 55% were focused on U.S. and North American equities and approximately 30% had a sector focus, with the most popular sector focuses being healthcare and TMT.

Key Findings

– In 2012, 64% of new hedge funds had equity or equity-related strategies (up 14% from the 2011 study).

– Management fees were generally higher for non-equity strategies, while incentive allocation rates continued to be pegged at 20% of annual net profits across all strategies.

– More funds permitted monthly redemptions in 2012 as compared to 2011 (the percentage increased from about 25% in 2011 to 36% in 2012), and a higher percentage of equity strategies had lockups or gates as compared to non-equity strategies.

– Sponsors of both U.S. and offshore funds set up master-feeder structures over 80% of the time. Most offshore funds were established in the Cayman Islands.

– In the area of seed capital, the initial funding in many of the bigger deals was between $75 million and $150 million typically locked up for two or three years; for the smaller deals, the amounts ranged from $10 million to $50 million. The full study is available here.

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The Alternative Investment Fund Managers Directive (the “Directive”) will be implemented on July 22, 2013 and will impact the reporting requirements of alternative investment fund managers (“AIFMs”) covered by the Directive, including hedge funds based in the European Union as well as non-EU managers, including managers based in the United States.

New York hedge fund law firm Sadis & Goldberg has issued an alert explaining the consequences of the Directive for U.S. based investment advisers acting as a manager to an alternative investment fund (“AIF”) based in the EU or that manages a non-EU fund (e.g., Delaware, Cayman) and markets the non-EU fund to investors in the EU. Investment advisers must comply with the first phase of the Directive by July 22, 2013 or carefully understand the nuances of the relevant exemptions in order to remain outside of the scope of the Directive.

Next steps for Non-EU based Investment Advisers

Advisers who plan to market funds to any EU member state after July 21, 2013 will need to:

Determine whether marketing undertaken after July 21, 2013 is at the initiative of the relevant EU based investors.
Check and monitor the status of co-operation arrangements.
Review contents of any private placement memorandum or other marketing materials.
Establish systems and controls for preparation of an annual report to investors
Establish place systems and controls for preparation of the periodic and regular disclosure to investors.
Review and monitor implementation of provisions of the Directive governing the obligations of AIFMs.

Conclusion: It would be prudent for advisers based in the US (and/or non-EU AIFMs) to consider their options and start planning for the new requirements under the Directive.

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An unidentified employee in hedge fund giant Man Group’s GLG division was arrested last week on suspicion of insider trading. The UK Financial Services Authority (FSA) announced the arrest of three fund management employees in London.

“The investigation concerned the employee’s actions as a private individual, and not as an employee, and that neither Man nor GLG was the subject of investigation.” Man said. It added the employee had been suspended and it was cooperating fully with the FSA. Reuters reports.

“Business conditions remain very tough, particularly with regard to (client) flows,” the new chief executive Manny Roman said in an in an interview with Reuters.

Man Group also announced in its annual report that it plans to cap future cash bonuses for its senior executives. Man’s shares have fallen by two-thirds since the start of 2011.

The SEC also charged New Stream Capital (Cayman), Ltd., a Caymanian adviser entity affiliated with New Stream, Richard Pereira, New Stream’s former CFO, and Tara Bryson, New Stream’s former head of investor relations, for their role in the scheme.

The SEC alleges that the hedge fund fraudulently raised nearly $50 million in new investor funds on the basis of misrepresentations. The hedge fund was facing $545 million in redemption requests when they filed for Chapter 11 bankruptcy in March 2011.

Legal-Bay previously announced that they had secured up to $10 million, specifically for B.P. settlement claims, however, exposure the law firm says the exposure may well be over $7 billion.

“We are seeing large amounts of claims coming in for pre-settlement advances north of $1 million.  Speaking to our experts across the Gulf region, they believe BP’s estimate to be rather low.  We have secured funds for the smaller claims, but we are now in talks –and actively seeking- more foreign hedge funds throughout London and Ireland, Spain, as well as in Brazil and other South American countries for large BP Settlement Funding in excess of US $1 million,” Legal Bay’s CEO, Chris Janish, said.

Lawsuit Funding in America has become very popular with Off-Shore hedge funds that want aggressive returns, with less risk than the traditional U.S. Equities Markets.