September 23, 2016

Weekly Roundup September 23, 2016

Legal & Compliance:

Legendary hedge fund manager Leon Cooperman was accused of insider trading. The Securities and Exchange Commission alleges that the Omega Advisors founder bought up Atlas Pipeline Partners securities after learning that the company planned to sell an asset. Omega was Atlas’ largest shareholder at the time. [Bloomberg] The investigation began after Cooperman’s son, who is also a hedge fund manager, allegedly inadvertently blew the whistle on his father’s activities after noticing suspicious trading in Atlas options prior to the sale’s announcement. [Bloomberg View] Cooperman has denied any wrongdoing, saying he’d rejected a settlement offer and would fight the allegations. [Reuters] But he also suggested that he might return his $5.4 billion firm’s outside capital and become a family office. [Financial Times] The case has reignited the debate over what constitutes illicit insider trading. [Financial Times]

As regulators move to hold chief compliance officers personally accountable, insurance broker Marsh has launched a new policy: CCO Preferred, covering “situations in which individual CCOs are targeted for being gatekeepers for non-intentional conduct.” The insurance would not cover “intentionally criminal behavior.” [Wall Street Journal]

New York State has issued new cybersecurity requirements for financial services companies, which will have to annually certify their compliance with the rules beginning in 2018. [New York State Department of Financial Services] A new report shows that just 4% of hacked publicly-listed companies report the intrusion to the SEC. [Wall Street Journal]

The SEC sued a general counsel for failing to disclose the depth and severity of a Justice Department probe. [SEC]

The SEC awarded a whistleblower $4 million, the 34th such payout in the past five years. [SEC] And that number is likely to continue to rise, with the SEC getting on average more than a dozen tips a day. [Financial Times]

“I don’t think regulation has gone too far. The banking industry should just shut up on this topic…. Do I think it’s fair? Tough shit. You lived in a bad neighborhood. You didn’t police yourselves. You’re going to have to live with this. You frickin’ blew up Planet Earth. Shut up and move on.” [Reuters]

A California appeals court reinstated former hedge fund manager Steven Lamar’s lawsuit against rap icon Dr Dre. Lamar claims he was the founder of Dre’s Beats headphones business and is entitled to royalties on all headphones based on the original design. [Guardian]

Caesars Entertainment Corp. hopes a new $1.6 billion offer will entice hedge funds and other creditors to allow it to exit bankruptcy. Three-quarters of the new money would be put up by the casino giant’s private equity owners, Apollo Global Management and TPG Capital Management. [Reuters]

The acting Solictor General urged the Supreme Court to reject Lynn Tilton’s constitutional challenge to the SEC’s administrative proceedings until its action against her is heard before the agency’s in-house court. [Bloomberg BNA]

The Canadian Securities Administrators are poised to allow retail investors access to hedge funds and other alternative investment products. [Financial Post]

Twenty-three of 28 European Union members asked the European Commission to delay a requirement that retail fund managers offer potential clients a “key information document” that would allow them to more easily compare products. [Reuters]

The International Swaps and Derivatives Association is pushing for greater standardization and automation, which its new white paper says will lower costs and complexity for market participants. [ISDA]

The EU’s anti-corruption verification procedures for officials were criticized by Transparency International after another Panama Papers leak showed the bloc’s former antitrust chief failed to disclose an interest in a Bahamian firm. [New York Times]

 

Interlude:

It’s not just you: A study from an Australian university finds that top corporate officials are more likely to show psychopathic traits than the population as a whole. In fact, with 21% of the 261 top corporate officials tested showing such traits—which could lead them to be inclined towards unethical or illegal behavior—corporate professionals have about the same psychopathy rates as one might find among imprisoned criminals. [The Independent]

“What about a shoe that would essentially come alive when you put it on? It would sense you. It would become the shape of your foot, and when it came alive it would light up. Wouldn’t it be great if shoes could do that?” [Wired]

 

Hedge Fund:

More than half of hedge funds—and nearly two-thirds of funds of hedge funds—say their assets under management dropped during the year ended June 30. [Pensions & Investments] But redemption pressures eased in August, according to eVestment [ValueWalk], and funds with less than $250 million in assets have seen their assets rise 4.1% this year. [Financial News]

The second quarter saw 239 hedge fund liquidations, down from 291 in the first quarter but up from 200 in the second quarter of last year. [New York Post]

Nearly three-quarters of institutional investors said hedge fund management fees must fall over the next year. More than half said the same about performance fees. [Bloomberg]

“The management fee should really be seen as an advance on the performance fee rather than in addition to it…. Lower management fees and higher performance fees—with appropriate hurdle rates—are an important means of encouraging hedge fund managers to perform well for their clients.” [Pensions & Investments]

The Edelweiss Group will buy the Ambit Alpha Fund, the largest hedge fund in India. [Bloomberg Quint]

Hedge funds, including Elliott Management and TCI Fund Management, are under pressure to pay for the right to vote in favor of SABMiller’s acquisition by Anheuser-Busch InBev, amidst fears that just 15% of the former’s current shareholders would be able to block the deal by voting no. [Wall Street Journal]

Satellite photo analysis is the latest research data point available to hedge funds. [Bloomberg]

Gut feelings—the scientific term is “introception”—really do guide successful traders, a new study shows. [Nature]

“We believe we are in the midst of the market correction we have been expecting. It will likely persist over the next 3-4 months and be the largest correction since the 2008 crisis.” [Bloomberg]

There’s only one woman running an activist hedge fund in the U.S.—and Dianne McKeever’s Ides Capital has returned 55% since its launch late last year. [Fortune]

A focus on India is paying off for Singapore-based hedge funds, which are up 2% this year. Hong Kong-based funds are down 2.3% and Japan-based funds 2.5%. Austalian hedge funds are up 1.9%. [Bloomberg]

Balyasny Asset Management, Brevan Howard Asset Management and Caxton Associates have set up Singapore units this year. [Bloomberg]

George Soros, Paloma Partners founder S. Donald Sussman and Renaissance Technologies’ Henry Laufer contributed a combined $5.5 million to Hillary Clinton’s presidential campaign in August. Republican nominee Donald Trump continued to fail to attract much money from the sector. [CNBC]

Launches: Marshall Wace Asset Management fundraising for private-equity version of peer-to-peer lending fund [Reuters]; ex-Highbridge Capital Management trader’s Sona Asset Management garners $300 million from Paloma Partners for new fund [Bloomberg]; former Coinbase risk chief launches blockchain hedge fund Polychain Capital [Institutional Investor]; SpringOwl Asset Management plans $2 billion real-estate, financial services, consumer and technology-focused activist fund [Reuters]; Indian investment bank Avendus Capital launches hedge fund business helmed by Ambit Capital founders [Business Standard]

Returns: Hedge Fund Research HFRX Global Hedge Fund Index flat Sept. [HFR]; Barclay Hedge Fund Index +0.65% Aug., +3.37% YTD [BarclayHedge]; Amvona Fund +53% YTD [ValueWalk]; Blue Diamond Asset Management +16.1% YTD [Financial News]; Haidar Capital Management +13.7% YTD [Financial News]; Quest Partners +12.7% YTD [Financial News]; Odey Asset Management -34.9% [Financial News]; Lansdowne Partners -12.8% YTD [Financial News]; Tudor Investment Corp. -3.6% YTD [Financial News]; Brevan Howard Asset Management Master Fund -2.5% YTD [Financial News]

People Moves: Asset Management adds 31 in Hong Kong, Singapore and Tokyo [Bloomberg]; Folger Hill Asset Management makes first three Asia hires [Bloomberg]; KKR names China Development Financial Corp. CEO to lead China operations [Wall Street Journal]; ex-Brevan Howard Asset Management partner Ben Melkman adds Caxton Associates, Goldman Sachs and Bank of America veterans to new hedge fund [Financial News]