October 21, 2016

Weekly Roundup October 21, 2016

Legal & Compliance:

The National Labor Relation Board and Bridgewater are potentially working to settling the administrative action the NLRB filed against the world’s largest hedge fund for a variety of restrictions placed on employees that, according to the NLRB, violated labor laws. While the settlement could lend guidance to the rest of the private fund industry, it has already forced many funds to re-evaluate their employment agreements and policies. [NYT]

Embattled hedge fund Platinum Partners has filed for Chapter 15 bankruptcy protection with their Cayman Island liquidators citing “severe and substantial liquidity problems.” [WSJ]

Deutsche Bank, facing staggering fines and questions about its solvency, pleaded with a New York State appeals court to overturn a $22 million judgment in a breach-of-contract dispute with hedge funds Good Hill Master Fund LP and Good Hill Master Fund II LP over credit default swaps. [Law360]

At the National Society of Compliance Professionals 2016 National Conference, Marc Wyatt, Director of OCIE, reminded compliance professionals, “OCIE and CCOs share a mutual interest in promoting compliance, which in turn protects investors.  As such, you are the first line of defense against compliance violations materializing into harm to investors, and OCIE views you as a key partner that we aim to inform and support.” [SEC]

While the SEC was touting its success in FY 2016 by filing a record number of enforcement actions, Sen. Elizabeth Warren (D-Mass) was decrying the lack of progress on a rule requiring companies to disclose their political spending activities. Warren took the unusual step of demanding President Obama fire Chief Mary Jo White “immediately” stating White’s “extraordinary, ongoing efforts to undermine the agency’s central mission.” [The Hill]

Standing directly between a the hedge fund industry’s challenges and those facing the legal industry, funds attorneys may face a tough few years. The firms that will come out ahead? Those with a strong international presence and a full-service offering. [WWL]

 

Interlude:

A taco with a shell made from bacon. BBQ Balls. Fried Clam Chowder. It can only mean one thing: It’s time for the State Fair of Texas. [Eater]

Can’t stop playing the latest game on your phone while work piles up or you miss your train stop? Chances are there’s a scientist behind that app and she’s hacked your brain’s “instincts, quirks and flaws” to convince you to keep playing. And now those scientists are growing worried about the potential uses. [1843]

 

Hedge Fund:

“The combination of high fees and underperformance have cost the [New York] State pension system at least $3.8 billion over the prior eight years, in fees and foregone profits.” A new report from New York State’s Department of Financial Services regarding New York State’s Common Fund’s investments in alternatives is…not pretty. [New York State]

“With modest returns and for the complexity of investing in hedge funds, I think the industry really needs to take not just a step forward, but a leap forward to being more transparent on the issue of price.” Albourne Partners is set to start collecting fee data from funds, and using that information to help its clients negotiate better rates. [Bloomberg]

While redemptions in hedge funds reached $28 billion, the largest quarterly outflow since the 2nd quarter of 2009, total assets in the hedge fund industry reached a record $2.972 trillion, according to a recent report. Also notable: $22 billion of the $28 billion in outflows came from firms with over $5 billion in AUM. [HFR]

Faced with continued investor redemptions, Brevan Howard is no longer charging a management fee on its listed macro fund. The fund, which now manages just over half its peak assets of $27 billion in 2014, is down 3.4% so far this year. [Bloomberg]

While the overall fundraising environment for startup hedge funds has rarely been more challenging, Qube, a Credit Suisse-owned fund, has launched with $800 million in committed capital and is expecting to hit $1.2 billion by early 2017. Credit Suisse is also planning to launch another fund, QT, early next year, aiming for $600 million in capital. [FINalternatives]

For the third consecutive year, Asia-based hedge fund startups are trending to a decline. Only 27 funds have launched in the year-to-date period, compared with 83 new funds last year. [Bloomberg]

A new survey by Deutsche Bank reveals that alternative UCITS funds’ assets have grown at an annualized 26% since the 2008 financial crisis. [DB]