Archive for the ‘Hedge Fund News’ Category
New York (HedgeCo.net) Global hedge fund manager Barclays Wealth reports that retirement is being rejected by a new breed of wealthy workers – the ‘Nevertirees’ – who want to carry on working for as long as they are able.
Ledbury Research surveyed over 2,000 high net worth individuals, all of whom had over $1.5m/1m in investable assets, 200 had more than $15m/10m. Respondents came from 20 countries across Europe, North America, South America, Middle East and Asia Pacific.
Sixty percent of wealthy individuals polled in a global survey say that they plan to become a Nevertiree, shunning traditional retirement, instead continuing to work, start businesses and take on new projects in their later years.
The report, the 12th in the Barclays Wealth Insights series, is based on a survey of more than 2,000 high net worth individuals, who were asked to consider what retirement and later life means to them.
The findings show that the concept of nevertirement is expected to grow over the coming decades, with over 70% of respondents under the age of 45 saying that they will always be involved in some form of work.
In particular, 75% of U.S. respondents plan to work part time after they have stopped working permanently, seven percent more than the global average. Specifically, 32% plan to work between five and 20 hours per week in “retirement”, and seven percent plan to work more than 20 hours per week, “simply reaching the normal age to retire” is not at all important in determining when they stop working.
Only 40% of U.S. high net worth individuals “completely agree” that they are “totally confident” in having enough money for retirement, with another 37% “slightly agreeing”. Only 48% of U.S. high net worth individuals would completely classify themselves as financially secure.
When planning for retirement 35% of U.S. wealthy feel that the rate of tax they have to pay is predictable, compared to 58% of Latin American high net worth individuals and 73% of wealthy individuals in Switzerland.
Further, one in ten of the wealthiest surveyed do not agree that they have enough money for retirement (greater than $15m in investable assets). Among the global wealthy who are already retired, only 51% agree they are completely confident in having enough money for their retirement.
HedgeCo News – Privately owned financial management company, ML Capital Asset Management, (ML Capital) announced that the first manager to launch on the Montlake UCTIS platform* will be Clareville Capital Partners LLP, the hedge fund founded by David Yarrow. The fund will commence trading on October 1, 2010.
“Yarrow and Donaldson’s investment style will appeal to a lot of our investors. Their strong performance in upwardly trending markets and excellent downside protection in perilous markets is demonstrated by their track record.” Lowry said.
“The past 10 years have illustrated the limitations of traditional “long only” equity investing.” Angus Donaldson added, “All investors should have the opportunity to protect themselves from market volatility by investing in regulated hedge funds. However, many of the managers who have launched alternative UCITS products have found that they have weak brand awareness outside of the hedge fund world. This applies not just to smaller boutiques but also some of the very largest hedge fund houses. “
HedgeCo News New Jersey-based hedge fund service provider Fi-Tek LLC has chosen Dublin for it’s European headquarters. “Ireland’s pro-business environment, availability of highly skilled personnel, the presence of many of our clients, and working with IDA were the key reasons Ireland was chosen as the location for our European Headquarters.” Peter Marshall, Managing Director, Fi-Tek Ireland said.
“Ireland is the largest hedge fund administration centre in the world with almost half of all global alternative investment funds operated from here.” Ireland’s Minister for Enterprise, Trade and Innovation Batt O’Keeffe said, “Fi-Tek’s decision to establish a European headquarters in Dublin shows we can out-perform rival locations for major global investments in the financial services sector. More than half the world’s leading financial services firms now have operations in Ireland.”
“Fi-Tek Ireland has recently gone live implementing HedgeTek with two leading global banks in Dublin,” stated Subir Chatterjee, Fi-Tek founder and CEO. “Dublin has become a center of expertise for hedge fund administration globally, and our intent is to make Fi-Tek Ireland a centre of excellence for us as well.”
HedgeCo News – Charter Group has teamed up with Brian Taitz to launch a new hedge fund administration firm, Charter Group Fund Administration Ltd. The firm is based in London and focuses primarily on offshore funds managed by boutique fund managers.
Taitz founded and successfully managed an award-winning fund administration operation in Sydney, Australia before relocating to the UK. In Taitz’s previous firm, clients included regional Hedge Fund of the Year winners, Best Market Neutral Fund winners, other alternatives including electricity and power hedge funds, as well as established and distinguished long only boutiques.
Taitz says that the UK market is fragmented with larger administrators turning away smaller funds and relying more on their size than their service levels to win clients. This leads to clients having to look to foreign providers to fill the gap and then having to deal with a plethora of issues such as time zones and language or cultural differences. Taitz says it is re-assuring for a fund manager to know that they can deal directly with the principals of the business whose office is around the corner.
The boutique offers full service fund administration to offshore funds and caters for a wide variety of strategies including equity long/short, long only, market neutral, arbitrage, global macro, private equity, fund-of-hedge funds and others. For more traditional funds, the firm offers an attribution/ performance analysis reporting service.
The firm sees its differentiating factors as being: an unrelenting focus on service quality; having the best technology available; hiring properly qualified staff; and being based in London, in close proximity to intended clients. “Our clients are not just one of hundreds fighting for management’s attention which may be the case at the larger shops” says Taitz.
The firm also has the distinct technological advantage that all its administrative services are carried out through a single integrated system – investor registry, fund accounting, investing and complex performance fees – reducing risk and leading to greater efficiencies.
“Our key strategic differentiator, however, is to pace our growth.” Taitz continues, “As a result we will position ourselves as a premier provider of fund administration services to boutiques. We will soft close periodically to ensure that service levels are never compromised.”
HedgeCo News – Virtual hedge fund, Hedgeye Risk Management, has appointed industry veteran Louis Gagliardi as Managing Director of Energy.
Gagliardi was noted in Robert Bryce’s book as being an “Analyst Who Thinks” and “the first time any major Wall Street research firm had dared question Enron’s valuation.” Gagliardi is also known for alerting investors as early as 2003 ahead of buying opportunities in emerging markets: Brazil’s Petrobras, Russia’s Lukoil, China’s PetroChina, Austria’s OMV, and Hungary’s MOL. Gagliardi has been cited throughout the media including CNBC, NY Times, Forbes, and Financial Times.
“We’re thrilled to have Lou champion our Energy effort and add to our growing platform; he brings experience across investment analysis and corporate, a stellar track record, and a history of thinking independently on behalf of his clients.” Keith McCullough, CEO of Hedgeye notes, “To that end, we’re confident that his standards and expertise will hold up to our client’s expectations, and our reputation.”
Hedgeye Risk Management will officially launch its Energy sector research and services to subscribers on September 16, 2010.
Accounting & Compliance International (ACI) – An investment advisor is any entity that provides fee-based advice regarding the buying and selling of securities. Under the Investment Advisers Act of 1940, investment advisors are required to register with either the SEC or the state – which one would depend upon the firm’s assets under management (AUM). Investment advisor registration requirements have changed under the Dodd-Frank Wall Street Reform Act. The SEC is currently working to implement the provisions of Act so all details are not yet known and certain aspects remain unclear; however, it seems that in regards to investment advisor registration requirements there will be two major changes to prior regulations.
The first change is a shift in the assets under management thresholds that determine SEC vs. state registration. The new requirements will have IAs with under $100 million AUM register with the state and those above $100 million AUM register with the SEC. There is an exception for private fund managers which will not have to register with the SEC until they reach the $150 million AUM threshold. The Private Fund Managers Exemption from registration for private funds with fewer than 15 clients has been removed completely, so unless the private fund manager is eligible for an alternative exemption, this asset threshold will determine registration.
Additional exemptions are outlined below, along with a summary of the investment advisor registration process. The deadline by which to adhere to these changes will be July 21, 2011 and advisors should be mindful to factor into their timeline at least 45 days for their application to be reviewed. For more information on new regulations or assistance with state or SEC registration contact Accounting & Compliance International (ACI).
Investment Advisor Registration Requirements In More Detail
Investment Advisor Registration (The Old Way)
Previously, IAs with $25 million AUM or less were required to register with the state and those with $30 million or more to register with the SEC. Many hedge funds, private equity funds, and venture capital funds that would meet the definition of an investment under the Advisers Act avoided registration through the Private Fund Manager Exemption Section 203(b)(3) which exempted firms with fewer than 15 clients from having to register with the SEC so long as they did not hold themselves out as an investment advisor. The definition of a client allowed a fund to be counted as only one client, so this exemption protected many private fund advisors from registration.
AUM Registration Status
< $25 Million State RIA
Whether registering an Investment Advisor with the SEC or the state, the process is going to be similar.
The Entitlement Process
First, the firm will need to download and fill out the entitlement package to be assigned a username and password for Web IARD (Investment Advisor Registration Depository) where all online forms for the registration can be completed.
Registration of the firm’s IARs
All investment advisor representatives (IARs) will need to be registered. IARs are the individuals that recommend securities at an investment advisor. In most states the IAR is required to pass the Series 65 exam and undergo a background check. As part of filing registration for the investment advisor (the firm), the IA must make sure that all IARs are properly registered and licensed. Generally, this will entail filing a U-4 for the IAR on the IARD system. New York does not currently require individuals to register as IARs, though they must demonstrate to the Attorney General’s Investor Protection and Securities Bureau that they are qualified.
Development of the Compliance Program
The firm will also have to develop certain compliance documents to show that an adequate compliance program is in place at the company as part of the registration process. The firm should:
o Business Continuity Plan / Disaster Recovery Plan
o Code of Ethics
o Policies and Procedures (including Insider Trading Policy and AML Procedures)
Completion of Application Forms
The implementation deadline for previously exempt firms to become RIAs is July 21, 2011, so firms that must complete this process should be mindful that the application will be reviewed for 45 days post-submission and factor that time into their timeline for investment advisor registration in addition to the time it will take to develop the application itself. Consequentially, the RIA Application should be submitted at least 45 days prior to the date that the investment advisor intends to be registered.
For more information on new regulations or assistance with state or SEC registration contact
Accounting & Compliance International (ACI) – 212-668-8700 or firstname.lastname@example.org.
· Submit the filing type “Apply for registration as an investment Advisor with the state”
· WAIT FOR THE STATE TO APPROVE YOUR REGISTRATION.
· File the Partial ADV-W to withdraw your SEC Registration – ONLY IF THE STATE REGISTRATION IS APPROVED. If the Partial ADV-W is filed before your State Registration is approved, during the time your application is being reviewed, your firm will be unregistered and unable to conduct business.
 SEC Registration Exemptions
The following exemptions from SEC Registration are currently available:
· SEC 408.1 – Private Fund Managers with less than $150 Million AUM – but again it remains to be seen whether the States will mimic federal regulations and remove the exemption for those within the threshold jurisdiction of the State(s)
· SEC.409 – Family Offices are exempt from SEC registration. This would include private fund advisors that provide investment advice to family offices only.
· SEC.408(2) – Small to mid-sized Private Fund Advisors which would likely refer to some subset of the private advisors under $150 Million AUM.
· SEC.403(B) – Commodity Trading Advisors registered with the CFTC are not required to register with the SEC, so long as they do not provide investment advice regarding securities.
· SEC 407 – Venture Capital Fund Advisors do not have to register with the SEC, but they must maintain books and records and submit reports to the SEC for investor protection as deemed necessary
· SEC 403(7)(A) – Advisors to Small Business Investment Companies – These advisors are exempt from registration if they are advisors only to small business investment companies licensed by the Small Business Administration
· SEC 403(A) – Foreign Private Advisors who have no place of business in the US, fewer than 15 clients, with less than $25 million AUM attributed to US clients, and does not hold itself out as an investment advisor
HedgeCo Blogs – I asked Andrew Ross Sorkin: “In hindsight, what is the most important lesson to be learned from the financial crisis?”
“It all comes back to one word: debt.” Sorkin said, “We can blame the financial crisis on a lot of things — misguided housing policy, too-low interest rates, global imbalances, lax regulation, bankers-gone-wild — but in the end, it was a function of an over-leveraged system.”
Andrew Sorkin, the award winning financial reporter for the New York Times, spent over five hundred hours interviewing high net worth individuals, advisers and officials in an effort to capture the full account of the Financial crisis in detail.
In his book: “Too Big To Fail – The inside story on how Wall Street and Washington fought to save the financial system – and themselves”, Sorkin recounts the maelstrom that struck high finance in 2008 in story-like detail.
I can see why it has been on the bestseller list for over 23 weeks. Once revealed, it is hard to look away from the secret life of those in power. “Pay very much attention to the man behind the curtain.”
Sorkin is also the editor and founder of Dealbook, an online daily financial report. He has won a Gerald Loeb Award, been named Young Global Leader by The World Economic Forum and has recently been added to The Directorship 100, which recognizes influential US corporate boardroom members.
HedgeCo News – Former IBM vice president Robert Moffat was sentenced to six months in prison in the Rajaratnam/Chiesi hedge fund insider trading case, the Courthouse News Services reported this morning. Judge Deborah Batts additionally fined Moffat $50,000.
“White-collar crime is just as destructive to our social fabric as the crimes of drugs and violence,” the Judge said in handing down the sentence. Moffat’s conspiracy count carries a maximum sentence of five years in prison and a maximum fine of $250,000. His securities fraud count carries a maximum sentence of 20 years in prison and a fine of $5 million.
Moffat pleaded guilty in March to conspiracy and securities fraud stemming from his involvement in the largest US hedge fund insider trading case in history.
The court documents reveal that in September 2008, Moffat provided Chiesi with insider information in August to October 2008, relating to IBM and Lenovo Group Ltd.
Moffat confessed to providing the indider information to to Danielle Chiesi, Rajaratnam’s co-defendant. She worked for New Castle Partners, an equity hedge fund group affiliated with JPMorgan Chase & Co.
Chiesi, along with Sri Lankan billionaire Raj Rajaratnam, are scheduled for trial in 2011.
Moffat said he did not use the information to make money, but that he passed it along to Chiesi through “misplaced trust” and “a misguided desire to appear important and knowledgeable.” the Courthouse News Services said.
• the acquisition by Peakside of BofAML’s 100% indirect interest in the general partner of the Merrill Lynch European Real Estate Opportunity Fund L.P. (“MLEREOF”), which has a total of EUR 261 million ($335.6 million) of capital commitments;
• the replacement of an affiliate of BofAML with Peakside as the manager of MLEREOF;
• the acquisition by Peakside of BofAML’s interests in the general partner and investment manager of the Bosphorus Real Estate Fund I (“BREF”), which has a total of EUR 204 million ($262 million) of capital commitments; and
• the completion of a portfolio management agreement between Peakside and an affiliate of BofAML for Peakside to manage a portfolio of European real estate investments held directly or indirectly by BofAML affiliates.
The Fund portions of this transaction have been approved, with the requisite voting percentages, by the limited partners of both the MLEREOF and BREF funds. In connection with the transaction, MLEREOF will be renamed “Peakside Real Estate Fund I”. BofAML plans to maintain its limited partnership positions in both funds following the transaction.
Peakside has been newly created by the former senior managers of the European team of the Real Estate Principal Investments group within BofAML, consisting of Roger Barris, Stefan Aumann, Boris Schran and Mark Fenchelle. The team was responsible for the management of the two real estate funds and the European BofAML portfolio, In addition to the senior managers, Peakside has employed 13 former members of the BofAML group and plans to hire an additional 4 persons, including Christoph Munte, formerly of Morgan Stanley, who will join as General Counsel and a member of the Peakside Management Committee.
Peakside has opened offices in the Cayman Islands, Switzerland, the United Kingdom, and Luxembourg. Peakside will provide investment advisory, deal origination and execution, asset management and fund management services in real estate across Europe, including CEE and Turkey, to qualified investor clients such as institutions and high-net-worth individuals. Going forward, Peakside plans to raise discretionary funds, but also plans to take non-discretionary investment mandates from investors.
“We considered many alternatives for these assets, and driven by our confidence in the Peakside team, we concluded that the best option, in our capacity as a limited partner in the funds and the owner of the proprietary assets, is to allow the Peakside team to continue to manage the funds and the legacy European real estate assets as an independent company.” Jim Forbes, BofAML Global Principal Investments executive, said.
HedgeCo News – Helvetia Wealth has expanded its influence in Scotland with the acquisition of Dunedin Independent, Scotland’s largest independently-owned financial advisor (IFA) . With GBP350 million ($539 million) in AUM, Dundein is ranked in the top 100 wealth management companies in the UK.