SEC Charges Feeder Funds in Petters Ponzi Scam

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Two Minnesota-based hedge fund managers and their firm have been charged with helping Minnesota businessman Thomas Petters carry out his multi-billion dollar Ponzi scheme.

The SEC announced in a complaint Wednesday that James Fry, Michelle Palm, and Fry’s firm Arrowhead Capital Management were charged with securities violations.

The SEC alleged that Fry and Palm, and Arrowhead Capital invested more than $600 billion in hedge fund assets with Petters while collecting more than $42 million in fees.

The agency also alleged Fry, Palm, and Arrowhead falsely assured investors and potential investors that their money would be safe through certain collateral accounts.

The agency then alleged that Fry, Palm, and Arrowhead hid Petters’ inability to pay back investors by entering into secret note extensions with Petters.

Petters was sentenced in April 2010 to 50 years in prison for orchestrating the scam that took in $3.7 billion in investor money that was supposed to be placed in funds investing in asset-backed paper, the assets being large-ticket appliances. But the transactions and the paper turned out to be fictitious.

Palm pleaded guilty to one count of securities fraud and one count of making false statements to SEC staff during investigative testimony.

Fry pleaded not guilty to multiple counts of securities fraud, wire fraud, and making false statements to SEC staff during investigative testimony. He is scheduled to go on trial in February.

SEC Complaint Against Funds in Petters Ponzi Scam

Investment Jumps in Socially Responsible Alt Funds

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A new report finds that investment in alternative investment funds with environmental, social and governance criteria went up about 16% from last year.

“Sustainability Trends in Alternative Investments in the United States,” a report from the SIF Foundation by the Center for Social Philanthropy at the Tellus Institute, details that $80.9 billion was invested in 375 alternative investment funds - hedge funds, property investment, venture capital and private equity - incorporating ESG criteria at the beginning of 2011.

According to the report, that’s a 15.9% growth in combined assets since the beginning of 2010, when 346 alternative funds managed a combined total of $69.8 billion.

The report also found that hedge funds lagged behind other fund vehicles when it came to socially responsible investment with 47 hedge funds, representing a total of $2.6 billion in assets under management. That’s only 12.5% of funds reported with an ESG mandate.

“Sustainability Trends in Alternative Investments in the United States”

Mass pension moveable $ 1B in hedge funds

The Massachusetts Pension reserves investment is $ 1 billion in hedge funds and another billion for local currency emerging markets debt.

50.3 Billion dollar pension is also cut three billion dollars from shares as part of the new allocation plan as an asset, a pensions and investments, the report.

The changes were approved Tuesday and will cut Prim ' S global equity allocation to 43 percent from 49 percent, with the reduction, which focused on International shares and domestic large-cap shares.

Steve Grossman, Massachusetts state Treasurer and PRIM President, said transferring the asset mix of the current assignment may take up to nine months, pensions and investment reported.

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Pension plan allocates $ 200 M to hedge funds

San Diego County employees retirement Association (SDCERA) is planning to allocate $ 200 million to hedge funds.

Pension plan will devote 100 million dollars to long/short credit hedge fund Saba Capital Management, while the remaining $ 100 million is dedicated to the Shaw as part of its global macro/CTA portfolio, by HFMWeek.

SDCERA currently allocates approximately 1.7 billion dollars to 17 global macro and relative value hedge funds.

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AIMA says hedge funds is ' safe to fail "

A London-based financial organisation said Thursday that hedge funds should not be subject to rules currently being discussed in the United States.

Alternative Investment Management Association, which has 1,250 companies members even in the hedge fund industry, argued that hedge funds are not a "risk for financial stability" throughout the world.

The newly created United States-based financial stability Oversight Council views as non-bank financial firms should be regarded as "systemically important" and hence be subject to additional regulation of the Federal Reserve.

One of AIMAS argument is that hedge funds industry, with about 10,000 hedge funds manage a combined $ 2 trillion in assets, is still small compared with other financial sectors like investment banking.

AIMA also pointed out that more than 1,400 individual hedge funds in 2008, at the height of the financial crisis has closed or were dismantled without prejudice "the stability of the financial system at large."

AIMA President Todd Groome said, "2008 experience shows that hedge funds are ' safe to fail", even if they are not fail-safe. Furthermore, hedge fund activities not usually pro-cyclical market dynamics, they tend to be Luther or to seek market inefficiencies and through their investment activities tend to increase the effectiveness of the markets. "

Groome was recognised by hedge fund managers, register with the SEC as a means of the regulation.

The Securities and Exchange Commission adopted new rules in June, introduced under bill economic reform Dodd-Frank requires hedge fund companies as well as private investment advisors with assets under management of more than $ 150 million must register with the SEC. Rules take effect in March.

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Hedge funds focus on New Jersey teachers

New Jersey-based hedge fund managers David Tepper and Alan Fournier has created a new non-profit organization that wading into the emotionally charged arena of the State's public education system.

Better education for children was launched (B4K), based in New Brunswick, earlier this month by Tepper, founder of 16 billion dollars the Appaloosa management and Fournier leading Pennant Capital Management, which has about 3 billion dollars in assets under management.

The objectives of B4K, however, has put it at odds with the New Jersey Education Association, the State's major teachers Union, according to an article in the Wall Street Journal.

B4K advocates for tying tenure to teacher evaluation and elimination of seniority in teacher-hiring decisions in the New Jersey public schools, among other things.

An estimated 112,000 teacher teaches over 1.3 million students in 2,480 public schools, NJ Department of education data.

B4K has already launched an ad campaign, the journal reported, in order to fight back against NJEA ads criticizing Governor Chris Christie for his attacks on the teacher's Union, as well as cuts in education in the State budget.

Tepper and Fournier has links with Christie due to both its hedge fund company in the wealthy enclave of Chatham, where Christie owns a home. Tepper is also a major aid donor to the community FoodBank of New Jersey, which is also supported by Christie's wife, Mary Pat.

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New rules for hedge funds, family offices

Hedge fund advisers will need to comply with new regulations that the Securities and Exchange Commission adopted new rules as part of the Government's desire for greater transparency from hedge fund industry in the Dodd-Frank financial reform bill.

Rules, approved by a 3-2 vote Wednesday, demanding that hedge fund companies as well as private investment advisors with assets under management of more than $ 150 million must register with the SEC.

They must also provide information on their activities including the amount of assets held by a special fund, types of investors in the Fund and Adviser services to the Fund.

But the rules comes with a caveat – they begin to not take effect until 30 March next year.

SEC Chairman Mary Schapiro hailed passage of the new regulations SEC after their passage.

"These rules fills an important gap in the regulatory landscape," Schapiro said in a statement.

The SEC also approved on Wednesday a new rule exempting "family Office" or entities established by wealthy investors to manage their personal portfolios from any regulation provided that they must be checked only by family members and advise clients only.

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Hedge funds buy Yankee Stadium parking bonds

Hedge funds buy is said to have municipal bonds backed by car parks and garages located in the new Yankee Stadium in New York.

New York-based debt of distressed companies monarch alternative capital and Davidson Kempner Capital Management buys bonds, according to a Bloomberg report.

Bonds, who represents 237.6 million dollars of tax-exempt debt, was issued by Bronx parking Development Co., of New York City industrial development in 2007 to build three garages, renovate two others and renovate six lots near the stadium.

Both the monarch and Davidson Kempner join an existing group of bondholders which contains Chicago-based Nuveen Investments.

Hedge funds along with fellow bondholders are also good opportunities to own properties in Bronx parking lot by default on debt payments in the future.

Yankees Stadium facilities will not be able to generate sufficient operating revenue to make an interest payment on 1 April 2012, reports Bloomberg.

Garage generated 2.4 million dollars in revenues in April this year, 28 percent less than originally calculated according to a May 25 economic report to the bondholders.

Donald Cutler, General Council for Davidson Kempner, declined to comment on the transaction to HedgeFund.Net. A spokesman for the monarch options did not return a call for comment.

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