Hedge Fund News Wrap: Week Ending 9/20/13

SEC to Examine Hedge Funds in London

According to Dealbook, the United States Securities and Exchange Commission will be broadening its reach by reviewing foreign hedge fund managers in London.

Regulators are set to visit Mayfair, home to some of London’s biggest hedge funds. Once there, regulators will determine whether those hedge fund managers are in compliance with U.S. regulations.

Most of the hedge funds that are to be reviewed have a high number of retail investors, are employing managers who have worked in funds with compliance issues in the past, or are suspected of non-compliance.

The moves come after the implementation of the Dodd-Frank Act of 2010, which authorizes the SEC to inspect financial firms overseas.

“The reason you are seeing these examinations happening now is that we are a few years past the Dodd-Frank Act, which in certain circumstances required overseas managers to register with the S.E.C.,” said Robert Mirsky, partner and global head of hedge funds at KPMG in London. “With registration comes inspection by the S.E.C.”


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Goldman CEO Blankfein Supports SAC Capital

The CEO of Goldman Sachs, Lloyd Blankfein, sat down with Andrew Ross Sorkin to discuss his continuing support of the hedge fund firm, SAC Capital.

Currently, SAC Capital faces charges related to insider-trading fraud, forcing many of its investors to withdraw most of their money and leaving the firm to depend on CEO Cohen’s $9 billion personal investment.

According to Blankfein, the federal government is encouraging banks like Goldman to continue doing business with SAC, even though the firm has been indicted.

“They’ve been indicted,” Blankfein told Sorkin. “They haven’t been convicted. We are a big liquidity provider, we’re a major prime broker. That would be quite an existential decision for them if all the liquidity providers withdrew liquidity on the basis of an indictment which they’re contesting.”

“The government wouldn’t want us to withdraw that, because if everybody withdrew liquidity, you would vaporize a firm,” he continued. “The government did come back and encourage firms like ours to continue to deal with SAC.”

SAC Capital has denied all insider-trading charges and continues to operate through the indictment.


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Bloomberg Businessweek




Goldman Launches New Hedge Fund in Asia

Goldman Sachs’ in-house hedge fund has launched a new vehicle in Asia.

Oryza Capital was launched earlier this month, and is led by Goldman Sachs’ Investment Partners’ Asia co-heads, Hideki Kinuhata and Ryan Thall.

Oryza specializes in long/short equity funds, and will invest throughout Asia, including Australia and Japan.

Although hedge funds continue to unperform the broader market for much of this year, Asia’s economic performance has surpassed that of the United States and Europe, and a newfound interest in Japan due to deflation is attracting investors on a global scale.

According to Chicago-based data provider Hedge Fund Research Inc., inflows into Asia-focused funds took regional hedge-fund assets to $94.8 billion at the end of June, the highest since 2007.


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Bloomberg News



23 Funds Charged with Short-Selling Violations on Stock Offerings

The Securities and Trade Commission has charged twenty-three funds with short-selling violations ahead of public stock offerings. Among those charged were the hedge fund D.E. Shaw & Co., and the Ontario Teachers’ Pension Plan Board.

According to the SEC, the sanctioned firms are alleged to have violated the SEC’s Rule 105 of Regulation M, which prohibits the short sale of an equity security five business days before a public offering.

Short-selling has come under scrutiny following the financial crisis of 2008, and the Dodd-Frank Reform of 2010 has made it easier for the SEC to monitor hedge fund activity.

“Through this new program of streamlined investigations and resolutions of Rule 105 violations, we are sending the clear message that firms must pay the price for violations while also conserving agency resources,” Andrew J. Ceresney, Co-Director of the SEC’s Division of Enforcement, said in a statement.

All but one of the firms settled with the SEC, which netted $14.4 million from the settlements. However, the firms are not required to admit or deny wrongdoing.


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Reuters HedgeWorld

The Street