Hedge Fund Exchange

N.Y. Move Could Double-Tax Hedge Fund Managers

The New York Times, June 30, 2010

Finally, Gov. David A. Paterson and legislative leaders have found something they can agree on: that hedge fund managers from Connecticut and New Jersey should pay the state of New York millions more in taxes.

As they grapple with a gaping budget shortfall, Mr. Paterson and the lawmakers plan to enact a tax change that will treat much of the compensation earned by the fund managers who work in New York but live outside the state as ordinary income.

However, industry observers say the move could open up fund managers to double taxation and take some of the shine off New York as a hedge fund destination, The New York Times’s David M. Halbfinger reports.

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Paulson, Calpers object to Lehman bankruptcy plan

Jonathan Stempel, Reuters, June 29, 2010

A group of Lehman Brothers Holdings Inc's creditors, including the largest U.S. pension fund and a prominent hedge fund, said they object to the investment bank's Chapter 11 bankruptcy plan.

In a filing in Manhattan bankruptcy court on Tuesday, the group of 12 hedge funds, pension funds and asset managers said the current plan would sow conflict among creditors, and could treat large bank creditors better than other creditors.

This, it said, could result in years of needless lawsuits, delay the deserved recovery of tens of billions of dollars.

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FINRA Hearing Panel Bars Broker for Manipulating Stock Price Downward to Benefit Hedge Fund Client

MarketWatch, June 29, 2010

A Financial Industry Regulatory Authority (FINRA) hearing panel has permanently barred a former Deutsche Bank broker from the securities industry for manipulating the price of Monogram Biosciences (MGRM) stock in an effort to enrich a hedge fund client, himself and his family.

The panel found that Edward S. Brokaw, who worked in the Greenwich, CT branch office of Deutsche Bank Securities, engaged in a pattern of trading designed deliberately to drive the value of MGRM stock down and, in turn, drive up the value of contingent value rights (CVRs) on that stock. Included in the evidence against Brokaw were tape recordings of his phone calls to his firm's trading desk to place sell orders.

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AIMA: Hedge Funds Singled Out For Unfair Tax In Finance Bill

Amy Or, The Wall Street Journal, June 28, 2010

NEW YORK (Dow Jones)--The Alternative Investment Management Association has voiced concern over taxing larger U.S. hedge fund managers to finance the cost of the financial-regulation bill, saying the industry has been "singled out for more onerous treatment."

The cost of the bill is estimated at up to $19 billion.

The global hedge fund association, which represents more than 1,100 members in over 40 countries, said the assessment on hedge funds with $10 billion or more in assets is "unfair" and "inappropriate," and said no hedge fund received public funds or caused any financial stress to a banking institution or other counterparty during the crisis. Under the proposal, besides hedge funds, the bill will be footed by financial institutions with $50 billion or more in assets.

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G20 Backs U.K., U.S. on Hedge Funds

Paula Schaap, HedgeFund.net, June 28, 2010

The G20 summit that took place in Toronto this past weekend backed Britain’s and the U.S.’s position on European hedge fund regulation. 

The final declaration that emerged from the meeting said the member nations agreed to implement “strong measures to improve transparency and regulatory oversight of hedge funds, credit rating agencies and over-the-counter derivatives in an internationally consistent and non-discriminatory way.” 

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Demise of Hedge Funds Has Been Exaggerated

Stan Luxenberg, The Street, June 28, 2010

NEW YORK -- Investors are returning to hedge funds. During the first four months of the year, hedge funds recorded $24 billion of inflows, according to HedgeFund.net.

The inflows represent a big turnaround from the turmoil of 2008. During the downturn, many funds were forced to liquidate, and some analysts predicted that the hedge fund industry was bound to shrink permanently. Hedge fund assets dropped from a peak of nearly $3 trillion in the second quarter of 2008 to $2.3 trillion this year.

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Investors Pull Money From Hedge Funds

DealBook/The New York Times, June 28, 2010

Money flowed out of hedge funds in the first quarter of the year as investors grew skittish about parking their money in alternative investments. With hedge funds performing poorly in the second quarter and more regulations set to go into force, net outflows could accelerate in this once-premier asset class.

There was a relatively large $11 billion net outflow of investor cash from hedge funds in the first quarter, fully erasing the $7.5 billion net inflow experienced in the fourth quarter of 2009, according to data from Thomson Reuters Lipper TASS.

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New York State May Tax Out - Of - State Hedge Fund Execs

The New York Times, June 28, 2010

NEW YORK (Reuters) - Recession-hit New York could raise an extra $50 million a year by collecting income taxes from people who work for hedge funds in the state but live elsewhere, according to a legislative plan to raise revenue.

The new plan would tax so-called carried interest.

A spokesman for Democratic Assembly Speaker Sheldon Silver (Above) said by telephone on Monday that it means hedge fund managers would be treated the same way as other commuters.

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Madoff, Merkel Ridiculed as Hedge Funds Hit Back in Psychedelic Radio Show

Tom Cahill, Bloomberg, June 28, 2010

The six nervous men in suit jackets huddled in the rain and waiting to enter a south London radio station get a last bit of advice from Dr. Stu, the host of The Naked Short Club.

“Oh, and don’t turn off your cell phones -- it adds a certain ambience,” said Dr. Stu, just before the 42nd broadcast of his hourlong show on Resonance 104.4 FM. Listeners get hedge-fund developments, gossip and gags in between poetry and B-side tracks from psychedelic rock bands such as Gong, the Orb and the Stooges, which the host says was the band’s name “before Iggy Pop got famous.”

Dr. Stu, who says he works for a hedge fund in London, declines to identify himself to add mystery to broadcasts -- most Monday evenings at 9 p.m. London time at 104.4 FM in central London or worldwide via http://www.resonancefm.com.

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New regulations limit banks' investments in hedge funds

Reuters, June 25, 2010

The U.S. financial regulatory reform bill is set to limit banks' investment in hedge funds and private equity firms, and Goldman
Sachs will have the most work to do.

Under the law now before Congress, still subject to final approval, up to 3 percent of a bank's Tier 1 capital can be invested in private equity and hedge
funds. For Goldman, the gap between the investments potentially affected and the 3 percent limit is biggest.

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