SAC Chief Gave Testimony

The hedge fund manager Steven A. Cohen has offered little public explanation of the stock trades that are the focus of an intensifying government investigation, according to Dealbook.. But Mr. Cohen, the head of SAC Capital Advisors, gave testimony to the Securities and Exchange Commission on the matter, which involves allegations of insider trading by a former portfolio manager.

Mr. Cohen said that his hedge fund sold the stocks in question after a portfolio manager said he was “no longer comfortable” with the position, The Financial Times reports, citing unidentified people familiar with the testimony. Any details of the conversation between Mr. Cohen and the manager, Mathew Martoma, are likely to feature prominently in the coming court action. The criminal case against Mr. Martoma is the first time the government has linked Mr. Cohen to questionable trades. The hedge fund was also warned by the S.E.C. that it might be the target of a civil fraud lawsuit…..

Wait, wait…there’s more at http://dealbook.nytimes.com/2012/11/30/sac-chief-gave-testimony/

Michigan Professor Tied to Insider Trading Case Bails

Sid Gilman, the University of Michigan neurologist linked to an insider trading case, has resigned his university position. Gilman, 80 was named by authorities as the person who leaked data to Mathew Martoma, 38, an SAC Capital Advisors LP hedge fund manager charged with insider trading, according to Bloomberg. Gilman quit his university post on Nov. 27^th.

Gilman had been paid $1,000 an hour to act as a consultant to Martoma and in 2008 allegedly gave the hedge fund manager details of a clinical trial for an Alzheimer’s drug being developed by Wyeth LLC. The neurologist treated Martoma as a “friend and pupil” while leaking him secret data for 18 months, authorities said….

Read more at http://www.bloomberg.com/news/2012-11-29/michigan-professor-tied-to-insider-trading-case-resigns.html

Hedge funds feel squeeze of tighter bank curbs

Tighter capital rules being imposed on banks to reduce risk in the financial system are starting to trickle down to hedge funds looking to borrow money to trade, the good people at Reuters tell us.

A J.P. Morgan Chase exec said Thursday the tougher capital holding requirements for banks mean some hedge fund borrowing costs will rise in the coming years. And that could make some trading strategies that rely on higher levels of leverage, or borrowed money, more costly….

Wait, wait…there’s more at http://www.reuters.com/article/2012/11/29/us-investment-summit-jpm-idUSBRE8AS1IJ20121129

London Hedge Fund Throws in the Towel

A London-based fund firm is shutting down.  Financial News reported that Julian Barnett, the founder of Ridley Park Capital, told investors in a letter that the firm is closing its doors after returns did not meet expectations in 2011. Barnett also added that as a result of the poor performance in 2011, the firm “suffered significant redemptions during the latter part of the year.” .

Ridley Park launched with approximately $350 million in assets in 2011, but its current AuM was not disclosed…

.More?  Go to  http://news.hedgefund.net/default.aspx?story=14396

Damage Control: Here's What Happened On SAC Capital's Conference Call This Afternoon

According to the good people at BI this afternoon, hedge Fund SAC Capital held its second conference call since a subsidiary hedge fund's manager, Mathew Martoma, was charged in the largest insider trading case in history. The call was short, less than half an hour, but CNBC's Kate Kelly gave the low down on what happened.

SAC Founder Steve Cohen has not been charged with any wrongdoing.

That said, if SAC is liable for anything monetarily, investors will not have to pay anything out. The hedge fund has set things up so that Cohen will take the financial hit.

Cohen has been meeting individually with portfolio managers to make sure everyone is on the same page....

Read more: http://www.businessinsider.com/sac-capitals-2nd-conference-call-2012-11#ixzz2Dgo9pnXA

The Stock Market Doesn’t Care About the Fiscal Cliff

Trading stocks on whether there’s a deal by January 1 is a fool’s errand. In the long run, the market just doesn’t care about that stuff, writes Daniel Gross.

….Stock trading is a fool’s game to begin with. Very few investors can beat the market. The market is dominated by insane, hyperactive machines that frequently don’t know what they are doing. Professionals mostly fail at beating the indices. And a bunch of those who do, we’re learning, are clumsy cheaters. (Pro tip: if you’re IM’ing about insider trading, don’t use phrases like “I don’t want to go jail.”)

Watching and reacting to what Congress people say about the cliff negotiations and the prospects of a deal won’t give you an edge—regardless of what the headline writers say. Why? Well,……

Read all about it at http://www.thedailybeast.com/articles/2012/11/29/the-stock-market-doesn-t-care-about-the-fiscal-cliff.html

Newsflash: Barclays Has Fired All The Employees Involved In Libor Manipulation That Didn’t Slip Out A Side Door And Beat Them To The Punch

Dealbreaker’s one and only Bess Levin writes: Barclays has fired five employees following its internal investigation of the rigging of Libor interest rates and disciplined another eight people, the head of its investment bank said on Wednesday. Rich Ricci, chief executive of Barclays’ corporate and investment banking, said “a lot” of the individuals identified in its internal probe had left the bank so it could not take action against them…

http://dealbreaker.com/2012/11/barclays-has-fired-all-the-employees-involved-in-libor-manipulation-that-didnt-slip-out-a-side-door-and-beat-them-to-the-punch/

Wall Street’s Reputation Remains a Dog’s Lunch

Wall Street’s reputation will remain “in the doghouse” as long as trading scandals continue to plague the industry, Morgan Stanley CEOJames Gorman said.

“Say you want to be out ahead of it and give a lot of speeches and talk about all the good we’re doing,” Gorman said today at an industry conference in New York. “And then some trader does some stupid thing like this guy at UBS did and he’s in jail and all bets are off,” Gorman said. He was referring to Kweku Adoboli, the UBS trader convicted of fraud this month in the largest unauthorized trading loss in British history.

Americans’ confidence in U.S. banks fell to a record low of 21 percent in June, with the percentage saying they have “a great deal” or “quite a lot” of faith in financial institutions about half that in 2007, according to a Gallup poll. Financial services and banking were the least-trusted industries in an annual survey released in January…...

Fascinated?  Quick -  while the flavor lasts go to Wall Street’s Reputation Remains a Dog’s Lunchhttp://www.bloomberg.com/news/2012-11-29/wall-street-s-reputation-remains-in-doghouse-gorman-says.html

SEC Weighs Lawsuit Against SAC Capital

At 8 a.m. on Wednesday, an hour when Mr. Cohen is normally at the center of SAC’s cavernous trading floor in Stamford, Conn., he sat in his office to hold a hastily arranged conference call with his clients., according to the NY Times report.

Wealthy investors dialing in from as far away as Europe and Asia listened to soothing classical music before the call started. Then they received some grim news: Federal securities regulators were preparing to file a civil fraud lawsuit against the fund.

The move, which stems from a criminal insider trading prosecution brought last week against a former SAC employee, is the most significant action yet by the government in a long-running investigation of Mr. Cohen, who has not been accused of any wrongdoing, and his firm….

http://www.cnbc.com/id/50005887

Hedge funds face profit headache in 2013

Hedge funds' glory days seem a long way off as they head into a tricky 2013, with bumper profits likely to remain elusive in markets now dominated by political and central bank action, according to the good folks at Reuters.

Speakers at the Reuters Global Investment 2013 Outlook Summit said the $2 trillion industry, which has disappointed investors with below-market returns this year and losses last year, faces a headache making money in an environment where markets are choppy and not as buoyant.

"We're now (in) a world where we recognize that the ability to make money is a lot more difficult and there aren't that many people who can do it. There simply aren't enough, it just doesn't exist," said Saker Nusseibeh, CEO of Hermes Fund Managers……

Get the big picture at http://www.reuters.com/article/2012/11/27/us-investment-summit-hedgefunds-idUSBRE8AQ15U20121127

Ackman investors to convert $2.2 bln into permanent capital

Hedge fund manager William Ackman moved one step closer to getting permanent capital for his Pershing Square funds when more than 120 investors committed to convert $2.2 billion of their investments into stakes in Pershing Square Holdings when it goes public, Reuters tells us.

"Our principal goal in launching Pershing Square Holdings, Ltd was to convert existing capital to an eventual permanent form," Ackman wrote in a letter to investors. "We are off to a good start," he added….

Ackman allegedly currently oversees roughly $11 billion in assets….

Find out more at http://www.reuters.com/article/2012/11/29/hedgefunds-ackman-capital-idUSL1E8MT00I20121129

'Head Trader' In The Biggest Insider Trading Case Identified

Bloomberg reports Phillipp Villhauer was the head trader at SAC Capital Advisors LP who allegedly helped the firm founded by Steven A. Cohen make $276 million on trades that led to the arrest of an ex-hedge fund manager for insider-trading, according to two people familiar with the matter.

Villhauer is referred to only as the “Head Trader” in a Securities and Exchange Commission complaint filed Nov. 20 in Manhattan federal court against Mathew Martoma, said the people, who declined to be identified because the matter isn’t public. He is referred to in an FBI complaint filed that same day as the “Senior Trader.” Martoma denies wrongdoing. Villhauer hasn’t been charged or sued.

“If this trader is not a cooperator, he is or soon will be in the government’s crosshairs,” said Andrew Frisch, a New York attorney and former federal prosecutor who isn’t involved in the case. “The government will see him as either a potential cooperator against others or as a worthy target by himself….”

Wait, wait...there's more good stuff at http://www.businessinsider.com/phillipp-villhauer-head-trader-at-sac-2012-11

Dismal year for quant hedge funds

According to the Financial Times quantitative hedge fund managers are facing up to one of their worst years on record as losses mount for many of the sector’s biggest names.

BlueTrend, the $11bn Geneva-based fund run by Leda Braga, dropped 5.3 per cent in October, bringing year-to-date losses to 3.1 per cent, an investor in the fund said. Winton Capital, the world’s largest quant fund, with $26bn under management, has seen its flagship futures fund drop 5.65 per cent in the year to November 27……

Read all about it at http://www.ft.com/intl/cms/s/0/714f3af8-3980-11e2-85d3-00144feabdc0.html#axzz2DbJoyJWK

“Never Told him…”: Testimony backs up Hedge Honcho

Hedge fund honcho David Ganek can breathe easier.  Sam Adondakis, a former analyst at Ganek’s $4 billion Level Global, testified that while he told plenty of folks at the now-defunct firm that he was getting illegal stock tips from a Dell insider, Ganek wasn’t one of them.

Sandy Goyal, a former Neuberger Berman analyst, pleaded guilty to obtaining confidential earnings data from his contact at Dell and then passing it on to Adondakis and others.

“What if anything did you tell Mr. Ganek about Sandy Goyal’s contact at Dell?” prosecutor John Zach asked the analyst Wednesday.  “I never told him about it,” Adondakis said.

Anthony Chiasson, Adondakis’ former boss at Level Global and Ganek’s former right-hand man, is on trial for allegedly participating in the scheme, which earned the firm millions…. Ganek, who is also a top art collector, came up again during cross-examination when Chiasson’s lawyer, Reid Weingarten, whipped out FBI interview notes that he said suggested Adondakis initially ratted out both Chiasson and Ganek…..

Read all about it at http://www.nypost.com/p/news/business/testimony_backs_up_ganek_s3QpXHAHa03SP5Ei49QSrM

Monster $46 Trillion Order F*#ks Up Stockholm Exchange

Stockholm Stock Exchange was paralyzed on the morning of a purchase order of over 4.2 billion index futures. The value of words corresponding to 131 times Sweden's gross domestic product, and the stock market reports on technical problems.

The order was on buy side of the order book and covered more than 4.2 billion futures, to a unit price of almost 107,000 dollars. It gives a theoretical value of 459 561 500 030 000, ie nearly 460 trillion dollars. Sweden's gross domestic product, by comparison, amounted in 2011 to more than 3500 billion….

Find out more at http://www.svd.se/naringsliv/nyheter/sverige/monsterorder-stoppade-borsen_7708362.svd

Edoma: totally how not to run a new hedge fund

       

From Hedgefundintelligence.com: It is usually not a great idea to extrapolate events at individual hedge funds into industry-wide themes or trends. In this most idiosyncratic of activities, what makes one fund or firm succeed – or fail – rarely applies more generally, in what is essentially a business about people.

But the shutdown of Edoma Partners, the London-based event-driven fund launched amid much fanfare two years ago by Goldman Sachs prop trading star Pierre-Henri Flamand, does seem to be one of those rare moments that illustrate some generic industry issues.

The demise of the firm, which had been running more than $2 billion at its peak with a team of some 20 people, was not surprising in itself. Edoma had struggled from the start, with the fund being down by about 7% since inception by the time that Flamand and his partners decided to throw in the towel at the start of November......

Want the whole story? Check out  http://www.hedgefundintelligence.com/IssueArticle/3121696/EuroHedge-Current-Issue/Edomaa-case-study-in-how-not-to-run-a-new-hedge-fund.html?ls=683

Shocker: An Appeals Court Just Granted Argentina The Right To Fight Hedge Fund Managers Another Day

They said it couldn't be done (or that it was highly unlikely).  But, Great Caesar's Ghost,  an Appeals Court has granted the group of bond holders that restructured Argentine debt (exchange bond holders) the right to challenge Judge Thomas Griesa's ruling that Argentina must pay bond holders that didn't restructure, or so Bloomberg reports.

For ADD sufferers and those of you who haven't been tuned into the financial soap opera this is a huge victory for Argentina, and it's a loss for billionaire hedge fund manager Paul Singer and other bond holders of the country's 2001 sovereign debt working with him....

More?  Check out http://www.businessinsider.com/argentinas-stay-on-payment-granted-2012-11

SAC Capital Advisors notified that SEC may bring insider trading charges against the firm

Steve Cohen's SAC Capital Advisors has received a Wells notice from the Securities and Exchange Commission, suggesting the regulator may bring civil charges of insider trading against the hedge fund firm, a person familiar with the matter told Reuters.

The $14 billion hedge fund firm held a phone call with investors on Wednesday morning to inform them of the notice, the source said. (A Wells notice indicates that SEC staff would recommend a civil enforcement action against the firm.)   Cohen, who founded the firm, has not been accused of wrongdoing. He was on the telephone call on Wednesday morning, the source said.

This is the first time the government has indicated it may move against the hedge fund firm itself on insider trading, after previously accusing only former SAC employees.

http://www.nypost.com/p/news/business/insider_capital_advisors_notified_hfuM3jpR9jWCRJndjN8rMN

Harvard doctor turned hedge fund felon lured by ambition, riches

According to Bloomberg from the age of six, Joseph F. “Chip” Skowron III aspired to be a doctor. At Yale, he earned both a medical degree and a doctorate in molecular and cellular biology, then qualified for Harvard’s elite, five-year residency program. Three years in, Skowron quit medicine for Wall Street. He and two partners started a group of health-care investment funds under the auspices of FrontPoint Partners LLC, a hot new property in the exploding world of hedge funds.

Skowron was soon making millions of dollars a year. He built a gabled, 10,000-square-foot home on three acres in the nation’s hedge-fund capital, Greenwich, Connecticut. He assembled a small fleet of pricey cars, including a 2006 Aston Martin Vanquish and a 2009 Alfa Romeo Spider 8C. He also spent vacation time engaged in Third World humanitarian causes.

Today, Skowron, 43, is serving a five-year term for insider trading at the federal prison at Minersville, Pennsylvania. At FrontPoint, Skowron lied to his bosses and law enforcement authorities, cost more than 35 people their jobs and stooped to slipping envelopes of cash to an accomplice. FrontPoint is gone. Morgan Stanley, which once owned FrontPoint, is seeking more than $65 million from Skowron, whose net worth a year ago was $22 million. Until he’s a free man, his wife of 16 years will have to care for their four children and Rocky, their golden retriever, on her own…..

More schadenfreud anyone?  Check out http://www.nj.com/business/index.ssf/2012/11/harvard_doctor_turned_hedge_fu.html

Hedge funds face big profit headache in 2013

Yes folks read it and weep.  Hedge funds' glory days seem a long way off as they head into a tricky 2013, with bumper profits likely to remain elusive in markets now dominated by political and central bank action. At least if you can believe Reuters.

Speakers at the Reuters Global Investment 2013 Outlook Summit said the $2 trillion industry, which has disappointed investors with below-market returns this year and losses last year, faces a headache making money in an environment where markets are choppy and not as buoyant.

Hedge funds made double-digit returns in seven out of nine years between 1991 and 1999, according to Hedge Fund Research's HFRI index, and made returns of more than 9 percent every year between 2003 and 2007 inclusive amid rising markets. However, their secret sauce of 'alpha' - profits due to a manager's skill rather than overall market moves - has been hard to find in the 'risk-on, risk-off' environment where markets can be more influenced by the words of euro zone politicians and central bankers than companies' fundamentals….

Grab a fresh hankie and go to http://www.reuters.com/article/2012/11/27/us-investment-summit-hedgefunds-idUSBRE8AQ15U20121127

Analyst: Level Global Boss Knew Of Insider Info

Level Global Investors LP founder Anthony Chiasson knew his hedge fund used corporate insiders to obtain information, an analyst testified Tuesday at Chiasson's trial for insider trading in Dell Inc. and other technology stocks.

Chiasson was briefed on a string of sources that went back to within Austin, Texas-based Dell — connections the now-defunct hedge fund exploited to make a major short ahead of a market-disappointing earnings announcement in August 2008, Spyridon “Sam” Adondakis told jurors in Manhattan…..

Read all about it at http://www.law360.com/articles/396939/level-global-boss-knew-of-insider-info-analyst-testifies

Accused Hedge Fund Fraudster Frozen

A federal judge has frozen the assets of a hedge fund and its manager after the Securities and Exchange Commission accused them of misappropriating assets and misleading investors, finalternatives writes.

The SEC sued Berton Hochfeld and his Hochfeld Capital earlier this month. The regulator said that Hochfeld had stolen some $1.3 million of the at least $6 million he raised, using some of it to buy a collection of antiques. Hochfeld, who was arrested on Nov. 9 on fraud charges, allegedly kept clients of his Heppelwhite Fund in the dark with a series of bogus account statements.

Hochfeld also allegedly violated a 2006 SEC ban from the industry—a ban that he allegedly neglected to tell Heppelwhite investors about…..

Get the whole picture at https://www.finalternatives.com/node/22190

Greek debt deal turns hedge fund trade to gold

Go figure. For a few hedge funds, Greek debt is turning into one of the trades of the year.

According to Reuters news that Athens - backed by euro zone ministers and the International Monetary Fund - will buy back some its own debt from private investors sets a floor under the price of its bonds, handing many who picked them up at rock-bottom levels big gains.

The funds - which include Daniel Loeb's Third Point - have spent months building up positions in the debt-beleaguered country's bonds, rightly betting that their price would rise as the risk of a Greek exit from the euro zone receded.

Some have already banked profits from that bet, but indications Athens will target a cost of around 35 cents on the euro in its buyback plan, if successful, is a boon for those still holding the bonds…..

Read all about it at http://www.reuters.com/article/2012/11/27/us-hedge-funds-greece-idUSBRE8AQ15D20121127