26/08/2010 Author: Shannon Hawthorne

HFMWeek Daily Snapshot - 26 August

NEWSPAPERS AND WIRES
The Alternative Investment Management Association (Aima), a global body representing hedge funds, said Thursday it will meet US policymakers and supervisors in September over the implementation of the Dodd-Frank Act, the Wall Street Journal reports. "Many of the measures that feature in the Dodd-Frank Act are being discussed in other jurisdictions, and it is desirable that there is a large degree of consistency in terms of approach and implementation," said Aima chairman Todd Groome in a statement. "If that consistency is not achieved it could lead to unnecessary duplication and increased costs." The London-based association, which represents over 1,000 corporate members in 40 countries managing over 75% of global hedge fund assets, didn't specify which organisations it will meet with in September. 

Europe's largest hedge fund manager Brevan Howard has reported revenues of more than $1bn for the first time, after making positive returns while others were losing money, though its accounts were filed more than five months late, reports Financial News. The most recent financial statements of Brevan Howard Asset Management have just been filed at Companies House. They relate to the period ended 31 March 2009, though ordinarily they should have been filed by 31 January 2010, since UK company law states that companies must file their accounts within 10 months. The company's annual returns, a statement of its partners, is overdue, according to Companies House' website. Brevan Howard declined to comment on the lateness. The accounts were for an eight-month period, while the previous accounts were for 12 months. Despite the shortened period, Brevan Howard's revenue increased from £530.9m ($824.1m) for the year ended 31 July 2008 to £701.7m ($1.1bn), or $1.09bn ($1.69bn).

Connecticut’s attorney general has sued the former endowment chief at Wesleyan University for allegedly setting up and running a hedge fund while on the school’s payroll, reveals FINalternatives. The lawsuit accuses Thomas Kannam of misusing “at a minimum, tens of thousands of dollars in university assets” to benefit several companies with whom he had ties, including hedge fund Cross Border Capital Advisors, which Kannam founded in 2001. The lawsuit from Connecticut Attorney General Richard Blumenthal—who is running for the state’s US Senate seat—follows similar litigation filed by Wesleyan against Kannam in January, now in arbitration. Kannam was fired by the Middletown school in October. In its lawsuit, Wesleyan claimed that Kannam’s “outside employment” was “in breach of his duty of loyalty, his employment agreement and the university’s conflict of interest policy”. 

Barclays Plc didn’t know its risk when it bought Lehman Brothers’ brokerage and was told by the US Federal Reserve to lend the defunct firm $45bn, a former Barclays trading executive testified, Bloomberg reports. Stephen King, who was assigned by Barclays managers to value the loan collateral in the 2008 financial crisis, said people kept telephoning to ask if the loan was safe. “We don’t even know what we’ve got, guys, so I can’t tell you that you’re collateralised,” King said he told Barclays executives. The brokerage sale closed a week after Lehman’s 15 September 2008, bankruptcy, the biggest in US history. King, who now runs New York hedge fund C12 Capital Management, was a witness in US Bankruptcy Court in Manhattan as London-based Barclays defended itself against Lehman’s claim that it should pay as much as $11bn for an allegedly undisclosed “windfall” on its purchase of the defunct brokerage, including $5bn on the Fed collateral. 

A US judge overseeing the liquidation of Wall Street conman Bernard Madoff's assets has asked a court in Gibraltar to transfer seized funds to pay victims, according to a court document Wednesday, AFP reports. The funds amounting to $73m were deposited in Gibraltar banks by Vizcaya Partners, a hedge fund which worked with Madoff's firm, US bankruptcy judge Burton Lifland said in a letter to the Gibraltar court, a copy of which was obtained by AFP. Judge Burton issued on 3 August a judgement ordering Vizcaya to pay $180m to government-appointed trustee Irving Picard overseeing the liquidation of Bernard L. Madoff Investment Securities (BLMIS). Vizcaya had allegedly deposited $180m in offshore accounts in the months before the Madoff scam was revealed. 

Alternative investment specialist Centaur Fund Services has been appointed as fund administrator by frontier market investment specialist Scipion Capital. The firm, which has around $1bn assets under administration, will provide Scipion with the full suite of fund administration services, including fund accounting and investor and corporate services. The appointment will allow Scipion to provide accurate daily NAV calculation and support services around the funds. There is no such thing as a generalised frontier market strategy,” said Nicolas Clavel, CIO and founder of Scipion. “We therefore needed a fund administrator that was able to adapt to our strategy and be thorough and flexible about the service it provides – the kind of customised service that Centaur specialises in.”

Hedge fund boss Richard Breeden was burned by a second support services company yesterday as a badly-timed PR move by Xchanging wiped 11% from its market value, according to City AM. Breeden European Partners saw £158m ($245.2m) shaved from its stake in the outsourcing provider as nervy investors fled the stock. Shares in Xchanging fell 10.8% to 110p after the market was spooked by an unexpected conference call in which chief executive David Andrews tried to dispel “baseless rumours” circulating about the company. Although the announcements were designed to reassure investors following the high-profile problems suffered by Connaught and Rok, many analysts missed the call as it coincided with results from outsourcing group Serco. 

Indian energy major Reliance Industries, controlled by billionaire Mukesh Ambani, is close to inking a deal with hedge fund DE Shaw to launch a 800m infrastructure fund, reports Reuters citing the Times of India. Referring to an unnamed source, the newspaper said the two firms were also looking at other areas such as carbon trading. Reliance declined comment. Ambani struck a deal in May with his long-estranged brother Anil Ambani, allowing them to compete directly with each other. Mukesh has since pursued markets where Anil is an established presence. 

PEOPLE MOVES
Citigroup has hired Christian Lusted from BNP Paribas SA to join its London-based commodities team as a director for hedge fund sales, reports Bloomberg. Lusted, who has more than 15 years of experience in banking and the mining industry, started on 17 August and reports to Mark Konijnenberg, head of commodities sales and origination in Europe, Middle East and Africa. Prior to the joining BNP Paribas in 2006, Lusted worked at Amalgamated Metal Trading in London. BNP Paribas said yesterday it hired Mads Hultgreen from BlueGold Capital Management as head of commodity derivatives European hedge-fund sales in London. Robert Jenkins, a BNP Paribas spokesman in London, declined to say whether Hultgreen was a replacement for Lusted. 

The chief executive of 3A, the fund of funds arm of Swiss private bank Syz & Co., has resigned after five years at the helm, says Financial News. Jean Keller, a well-known figure in the hedge fund industry, was instrumental in building the firm's business outside of Switzerland and grew assets to a peak of $4.5bn from $1.1bn during his tenure. Keller confirmed his departure, telling Financial News that when his gardening leave ends in February he will join Argos Managers, a small boutique asset manager based in Geneva, to help grow its business. He said: "I wanted to do something more entrepreneurial and go back to my roots in institutional asset management." Keller has bought a stake in Argos and is now one of three equal shareholders in the firm, alongside chairman Cristopher Gelli and chief investment officer Philip Best. Keller will become chief executive officer when he joins.