Hedge Fund News Wrap: Week Ending 2/7/14

SAC Trader, Mathew Martoma, Found Guilty

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Mathew Martoma, the former SAC portfolio manager at the heart of the firm’s most recent insider trading case, has been found guilty on two counts of securities fraud and one count of conspiracy.

Allegedly, Martoma obtained confidential information from a doctor familiar with the results of a clinical trial for an Alzheimer’s drug. The doctor served as the government’s main witness against Martoma. With the confidential information, Martoma was able to net $275 million in profits, while preventing losses for SAC in 2008.

Martoma is the eighth person from SAC Capital to be convicted of insider trading.

Martoma could face up to 45 years in prison for all of the counts combined. However, according to DealBook, experts believe he will only serve seven to 10 years in prison.

While a federal judge read the verdict on Thursday afternoon, Martoma remained stone-faced, as his wife, Rosemary, began to cry.

A lawyer for Martoma, Richard Strassberg, said, “We’re very disappointed in the case and we plan to appeal.”

 

See detailed coverage from:

DealBook

Business Insider

ValueWalk

  

 

SAC Prepares for Renaming Next Month

According to a report by the New York Times, SAC Capital will begin its restructuring by the middle of next month. Also, the firm plans to change its name.

The 22-year-old hedge fund plans to slim down to a family office, which will manage founder Steven Cohen’s $9 billion in wealth.

“We have taken to heart the government’s criticisms of our business model, and as we convert to a family office we are making substantive changes,” a SAC spokesman said in a statement.

“Steve Cohen and the management team are determined to do what they can to prevent a repeat of the problems we experienced and so we are simplifying out business, increasing management oversight and continuing to strengthen our compliance program.”

A report by Bloomberg News cites that Cohen will continue to run the firm with Thomas Conheeney, the firm’s president, and an additional layer of management between Cohen, Conheeney, and the firm’s three trading units will be implemented.

In November, the firm agreed to pay a record $1.8 billion fine to settle allegations of insider trading. However, six former employees pled guilty to insider trading, while two more were found guilty of securities fraud.

 

See detailed coverage from:

FINalternatives

Bloomberg News

DealBook 

 

  

Ex-SAC London Traders Move to Moore Capital

At least one hedge fund has reaped the spoils from SAC’s war with the Federal Government.

Moore Capital, a New York-based hedge fund, has hired a team of nine portfolio managers and analysts from the closed-down SAC offices in London. The team of nine trade utilities and infrastructure stocks, and focus on event-driven opportunities.

According to FINalternatives, this is considered the single, largest transfer of staff from SAC Capital to a rival since the firm’s $1.8 billion fine in November.

Rivals such as Balyasny Asset Management, BlueCrest Capital Management, and Millennium Management have also opened their doors to former SAC employees.

 

See detailed coverage from:

Business Insider

FINalternatives

Financial Times

 

  

Hedge Fund, Asian Century Quest Capital, to Close Most Funds

Asian Century Quest Capital, which used to manage nearly $2 billion in 2012, is down to less than $100 million—or 95 percent—in assets following investor redemptions and poor performance.

ACQ’s flagship posted gains of 5.5 percent last year, a stark difference from the Dow Jones Asia/Pacific Total Stock Market index, which rose 10 percent in 2013.

As a result, the New York-based firm is shutting all but one of its funds, including its flagship long/short equity fund. Only the long-only Equity Income Fund will remain open, according to a report by CNBC.

According to FINalternatives, ACQ has returned 76.6 percent to investors since it opened its offices nine years ago.

  

See detailed coverage from:

FINalternatives

CNBC