Hedge Fund News Wrap: Week Ending 8/22/14

Citigroup Faces Restrictions in Hedge Fund Sales

U.S. regulators will limit Citigroup Inc.’s ability to sell investments in hedge funds finance1and private equity funds to wealthy clients.

The restriction stems from an August 5th approval of a settlement between Citigroup and the Securities and Exchange Commission, over claims related to the bank’s previous sales of debt products.

In a letter to hedge fund firms, Citigroup states it can longer refer investors to their funds but that it is working with regulators to resolve the issue.

As part of the 2010 Dodd-Frank regulatory reform, the SEC has adopted a rule that restricts a party with “a relevant criminal conviction, regulatory or court order or other disqualifying event” from participating in a private offering.

A waiver can be granted, if the SEC believes that the firm is conducting business in the public’s interest.

However, Citigroup’s attempts to obtain a waiver will most likely require more review time, according to a source from The Wall Street Journal.

Citigroup has been offering 40 hedge funds to wealthy clients, according to ValueWalk. Citigroup’s private banking manages more than $31 billion, and clients are required to have a net worth of at least $25 million.

 

See detailed coverage from:

The Wall Street Journal

ValueWalk

Barron’s

 
Icahn Targets Hertz, Accumulates 8.48 Percent Stake

Activist investor Carl Icahn has his eyes set on the car rental company, Hertz Global Holdings, and has disclosed an 8.48 percent stake in a regulatory filing.

Icahn built his Hertz stake, which is worth $470.5 million, by buying options in recent months in hopes of engaging Hertz’s board and management in talks regarding “shareholder value, accounting issues, operational failures, underperformance relative to its peers” and Icahn’s “lack of confidence in management.”

This year alone, Icahn has gone after eBay, Family Dollar Store, and Apple.

In a statement, Hertz said that it welcomed a “constructive dialogue” with its shareholders.

Shares of Hertz rose by the end of the day on Wednesday, when the filing was released.
See detailed coverage from:

DealBook

The Wall Street Journal

Business Insider

 

 

Hedge Funds Lose to Porsche in U.S. Appeals Court

Over 30 hedge funds led by Greenlight Capital, Elliot International, and Perry Partners, lost their case against automobile maker, Porsche, in a U.S. appeals court.

The 30 hedge funds tried to sue the carmaker for 1.81 billion euros, or $2.4 billion, over allegations of market manipulation, according to Reuters.

According to Bloomberg News, Porsche has been fighting market-manipulation allegations since it disclosed in October 2008 that it had access to 74 percent of Volkswagen AG through cash-setting options. Ultimately, the legal disputes led Porsche’s holding company to sell its sport-car business to Volkswagen as debt rose, and abandon the planned merger.

After more than two years, a federal appeals court in Manhattan upheld a ruling by a lower-court that dismissed the lawsuits against Porsche. The appeals panel ruled that the alleged manipulation was “so predominately foreign” that U.S. courts could not claim jurisdiction, following a Supreme Court decision in 2010.

“The complaints concern statements made primarily in Germany with respect to stock in a German company traded only on exchanges in Europe,” the appeals court said in its ruling.
See detailed coverage from:

HedgeCo

FINalternatives

Bloomberg News

 

 

Conheeney, President of Point72 Resigns

Over the past year, the now-defunct SAC Capital Advisors has undergone many changes after the firm pleaded guilty to inside trading charges: a new name, a growing number of departures, and a change of business.

The most recent change has been the departure of its President, Tom Conheeney, who spent 15 years at SAC Capital (now Point72 Asset Management).

As President, Conheeney helped manage SAC and then Point72’s 1,000- and then 850-member workforce. As FINalternatives states, Tom Conheeney “served as the voice of SAC Capital Advisors during the insider-trading scandal.” Most memos that were sent to keep employees and the rest of the world informed about the insider-trading probe and the firm’s transformation had his signature.

In an internal memo announcing Conheeney’s departure, Point72 Chief Executive Officer Steven Cohen wrote, “The last few years have been the most difficult our firm has faced. The 2008 financial crisis and the 2010 aftershocks tested us, and just as we thought we were returning to ‘normal,’ we were rocked by revelations of insider trading by former employees. Tom’s leadership helped our firm survive these difficult times. We faced ordeals that would have put most other companies out of business.”

Conheeney’s successor will be Douglas Haynes, a former McKinsey & Co. director who joined SAC in February as managing director for human capital.

Conheeney will remain with Point72 through the end of the year as an adviser.

 

See detailed coverage from:

FINalternatives

DealBook

The Wall Street Journal