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.
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.
Connecticut-based hedge fund managers David Bryson, Bart Gutekunst and their advisory firm, New Stream Capital, LLC, have been accused of lying to investors about the capital structure and financial condition of their $750-plus million hedge fund focused on illiquid investments in asset-based lending.
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.
The lawsuit settlement funding firm for B.P. Gulf of Mexico Oil Spill plaintiffs, Legal-Bay, has been in talks with several foreign institutional hedge fund investors as well as traditional banks to raise more funding capital.
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.
Man Group announced in its annual report that it plans to cap future cash bonuses for its senior executives.
“Man said that short-term annual cash bonuses, which were previously uncapped, would be limited to 250 percent of salary for executive directors after discussions with shareholders.” Reuters reports.
The hedge fund giant’s shares have fallen by two-thirds since the start of 2011. The change comes under new CEO Emmanuel Roman, who started his leadership role in February 2012.
The SEC has announced an asset freeze against a Massachusetts-based investment adviser charged with stealing money from clients who were given the false impression they were investing in a hedge fund.
The SEC alleges that Gregg D. Caplitz and Insight Onsite Strategic Management in Wilmington, Mass., raised at least $1.1 million from clients that was used for purposes other than investing in the hedge fund they purported to manage. Investor money was merely transferred to the firm’s chief investment officer and other members of her family who spent it on personal expenses. The firm reported in SEC filings that it has $100 million in assets under management, however the purported hedge fund actually has no assets.
The SEC also says that instead of using investor funds to purchase shares in a hedge fund or to manage or develop a hedge fund, Caplitz transferred control of client money to Rosalind Herman, his friend who works at the firm.
As part of his scheme, Caplitz obtained funds from a real estate investment trust (REIT) by falsely representing that a hedge fund he operated was interested in making an investment in that trust. The public, non-traded REIT gave $135,000 to Caplitz so he could conduct due diligence on the REIT as a precursor to his making a $5 million investment that never materialized.
Hedge Funds Care’s 15th Annual New York Open Your Heart to the Children Benefit will this year be hosted by the New York Committee of Hearts and co-chairs Joseph Fisher, Deloitte and Dylan Curley, J.P. Morgan.
Hedge Funds Care is an international charity, supported largely by the hedge fund industry, whose sole mission is preventing and treating child abuse. It has 2 goals:
• To raise as much money as possible to fund the programs that do the preventing and treating.
• To showcase the philanthropy of the hedge fund industry.
The group announced that Paul Roth, Founding Partner of Schulte Roth & Zabel LLP will receive the Lifetime Achievement Award. Additionally, Paul Germain, Managing Director, Credit Suisse will be a featured speaker during the event. Please join us for this milestone event as we mark the organization’s 15th Anniversary preventing and treating child abuse.
The format of the evening is cocktails and dinner stations with no assigned seating, which allows guests an opportunity to mingle and network. The Open Your Heart to the Children Benefit is one of the key charity events in this industry, gathering over 1,000 industry leaders and raising over $2 million for child welfare programs in New York, New Jersey, and Connecticut. Registration here.
With the stock markets touching a new high, brokerage companies are all set to benefit from increased interest in equity trading.
However, the sector is still struggling to get past the previous meltdown and its profitability is still under pressure. The point is amply demonstrated by the results announced by leading broking firm TD Ameritrade Holding Corporation which reported lower profits on a year over year basis.
TD Ameritrade also saw good hedge fund interest as SAC Capital Advisors added to its position in the company during the previous quarter. The hedge fund currently holds 3.7 million shares of the investment brokerage company.
Alix Capital, the Geneva-based provider of the UCITS Alternatives Index (UAI) family of indices, has been named “Overall Swiss Investment Boutique of the Year” at The International Hedge Fund Awards 2013.
The awards held by Acquisition International Magazine in partnership with Preqin, a leading source of data and intelligence for the alternative assets industry, aim to celebrate successful companies and individuals in the hedge fund sector. Votes are cast by Preqin, Acquisition International Magazine subscribers, and other members of the international hedge fund community.
Louis Zanolin, CEO of Alix Capital, says: “It is an honor to be recognised as the best Swiss Investment Boutique by our peers as it further enhances our position as a leading firm in the alternative sector. We strive to provide investors with innovative products in the alternative UCITS space and now have 13 UAIX indices which enable product providers to offer exposure to a variety of alternative strategies.
“The research we regularly produce about the UCITS alternative funds industry allows us to gain insights into the growing alternatives market in this challenging environment. This has proven to be extremely beneficial in anticipating our clients’ needs.”
As the first strategy of its kind in the market, $5.3 billion EU-based hedge fund, Aquila Capital, intends to launch a Risk Parity Bond strategy. It is designed to provide fixed income investors with a diversified and liquid counterbalance to their existing exposures, which may be perceived as vulnerable should fixed income markets reverse.
Aquila Capital’s Risk Parity Bond strategy will invest with equal risk weightings across four types of fixed income asset. Each is uncorrelated to the others. They are Government Bonds, Corporate Bonds, Carry Positions in Emerging Markets and Inflation-linked Bonds.
The correlations of each of these asset types to different phases of the economic and fixed income cycles are also highly varied. This means that as one asset type goes down, one or more of the others should rise. This helps to mitigate risks and stabilize returns across the portfolio on a sustainable basis.