K1 Hedge Fund Founder Arrested

Founder of Germany's K1 Arrested in Fraud Probe

Helmut Kiener, the founder of K1, has been arrested by German authorities in a large fraud probe concerning a Caribbean-based fund that he managed. Investigators are looking into Kiener over charges of fraud and breach of trust.

According to the arrest warrant, "Barclays and BNP Paribas may have lost millions of dollars in the case, which prosecutors say spanned the Atlantic and featured lavish personal spending on planes, a helicopter and luxury properties."

"There is a suspicion that the 50-year-old suspect did not comply with investment guidelines agreed with an English and a French bank among others and has used several millions in funds contrary to agreements," prosecutors said in a statement.

The case centres on the K1 Global Sub Trust hedge fund run by Kiener, a psychologist by training who once sold ads for the Yellow Pages in Germany before moving into the financial sector.

Barclays may have lost most of the nearly $220 million (133 million pounds) it invested with the fund, authorities said.

"If Barclays had known of the suspect's plans, it would not have provided the K1 Global Sub Trust any funds for investment between 2006 and 2009," the arrest warrant seen by Reuters says, adding the funds "are mostly lost as far as we now know". Source

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Email Marketing Best Practices

I worked as a risk consultant and capital raiser for 7 years before starting my own firm. During the last few years of those positions I was responsible for raising most assets on an email and phone-based system and I have slowly picked up some tips for capital raising since then. I started my own firm 2 years ago and since then I have sent and received over 800,000 emails. Our business is so email-based that we have been forced to study best practices within this space to improve our efficiency at connecting with potential clients.

Most CEO's don't invest their time or put much importance on managing email communications. One of my favorite quotes by Brian Tracy is that if you want what to have others don't, you have to do what other's don't. If you invest your time in increasing your effectiveness at email marketing you will have an edge over others.

Tonight I'm speaking on email marketing for capital raising. I will be sharing best practices in reaching out to potential and current investors through writing copy and using email marketing best practices. While 99% of those reading this blog will not be able to attend the event we will be posting a recorded video of this discussion to Hedge Fund Premium and sharing some of the tips below within this post:

Email Marketing Best Practices

Understanding Importance of Copy: What is the difference between a $1 and a $100 bill? The message on the paper. The message on your email, the message on your investor letters, the message on everything you write makes the difference between it being worth $1,000 and $100,000. I think that sales copy writing is consistently under-valued and overlooked by business and investment professionals of all types. One of my best tips for email marketing would be to simply not overlook the power of a carefully constructed email marketing campaign or well written piece of communication.
Use the professionals first name within the subject of emails to them - Marketing Sherpa 2008 study showed this increased open rates by 30%, using both the first and last name increased open rates by 22%.
Focus on the Headline: The most important part of any piece of copy is the headline. Often times over email the headline of the email is a slight variation of the subject line, perhaps the subject line minus the person's first name. Focus on fitting a benefit and then the chain reaction of that benefit into the headline if possible. "Double Your Capital Raising Resources to Cultivate More Investors Each Day" We have found that putting the benefit after your firm name is most effective. Just be careful not to promise benefits that are odds with your compliance department.
Focus on the Start: Hook the reader within the first paragraph. Make sure the first paragraph is no longer than 2 sentences and provides a very concise summary as to what will be discussed within the following message. If possible try to fit in both what the benefits will be of hearing this information and what the dangers are of not paying attention to this information. Psychology studies consistently show that professionals are almost twice as likely to listen more closely and take action on information related to a fear or some negative result rather than some potential benefit or positive outcome. This does not mean you should scare clients into working with you, but you should hook readers using framing which mentions the positive as well as negative consequences of not taking action. The recent use of email browsers which let you preview the first 50-150 words of email messages make the start of your email even more important.
Use Professional Email Distribution Services: Use a professional email distribution services such as Aweber, this costs $10/month or less to start using. By using this service your emails will be delivered more often, your campaigns will be more organized and the service will more than pay for itself through saving you and your time valuable time. Make sure that whatever service you use, you consider opt-in confirmation and enable an unsubscription link at the bottom of each email you send.
Automate Relationship Development: Use automated follow up emails. Write a series of 20 educational emails covering industry white papers, industry findings, commonly misunderstood terms, and information about your fund. Once you have qualified an investor, ask for their permission to opt into an email list which will automatically email these professionals once a month for the next 20 months. If you deliver value within each of these 20 emails your further inquiries will be well received. We currently use Aweber to send out automated emails to over 50,000 professionals each month.
Use Stories: Whenever you are writing an email or sales letter try to incorporate a story of some type. How was this product created? How did your career and experience evolve and bring yourself to this point where you have gained this knowledge? If you scroll up to the beginning of this post you will see that I have a short story about my own experience with email marketing which led me to write this article.
Picture & Signature: End your communication with a picture of the professional on your team which is held out as the communicator or leader. Make sure that a real scanned signature and professional picture are included to help readers connect with your team.

Hope these tips help you improve your email marketing campaigns

- Richard Wilson

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Boston Hedge Fund Event Tonight

Boston Hedge Fund Event

See everyone at the Boston hedge fund event tonight: Boston Hedge Fund Networking Event, Thursday 10.29.09

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Business Investment In Brazil Rising

Business Invested in Brazil Rising

I know of several entrepreneurs, investment banks and hedge funds who are actively investing in Brazil or making plans to do so. Our company has a full time employee based in Brazil and we meet with fund managers within the area. I still believe that Brazil is underestimated within the shadow of China and I believe that Sao Paulo is going to emerge as a top 5 financial center over the next 10 years. Here is a recent article which just came out on Brazil, thank you to the Albourne Village for the tip on this story.

Over the last decade we've gotten used to reading articles about companies with big plans to expand in China: Wal-Mart (WMT), McDonalds (MCD), Starbucks (SBUX), IBM (IBM)... and the list could go on and on.
That will go on for awhile, but you know that for the next sevearl years, especially in the lead-in to 2016, we're going to read A LOT more stories about companies with big ambitions in Brazil.

Spanish banking giant Banco Santander (STD) is thought to have potentially gigantic problems, but for now, they're expanding while other banks are in retreat, and the South American giant is big, juicy target. Source

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Hedge Fund Fight Night

Hedge Fund Fight Night for Charity Held in Hong Kong

Hedge fund managers compete against each other all the time but rarely does it come to actual blows. Then, there's Hedge Fund Fight Night. Yes, it's that time of year again when hedge fund managers and professionals get together in Hong Kong to fight, with all the proceeds going to charity.

An estimated 800 hedge fund professionals will be in the audience October 29th to watch 12 of their colleagues battle in the ring for three, 2 minute rounds. The professionals will also bid on holiday packages benefiting Operation Smile and Operation Breakthrough. The goal of the event is to raise almost $130,000 to "repair children’s facial deformities and combat crime and juvenile delinquency in low-income and immigrant communities."

Tables for 12 cost between HK$18,000 and HK$50,000, and pay for training the fighters and hosting the event, said Robert Derry, IronMonger’s managing director, in an interview. A medical team will be on standby during the bouts.

Aside from Descourtieux, Bruce “Almighty” French of UBS AG, Steve “Dynamite” Davidson from JPMorgan Chase & Co. and Jesse “Happy Feet” Kavanagh of Nomura Holdings Inc. will also fight in the finals. John “Headcount Reduction” Crane of 3A Asia Ltd., a fund of funds, is the oldest fighter at 49.

Boxing and other martial arts are gaining popularity among Hong Kong’s professionals, especially in industries such as trading which thrive on risk, reward endurance and punish mistakes with brutal blows, according to Andrew Wong Kee, managing director at Jab. Wong Kee says the number of Jab’s students have risen 20 percent since September 2008 as more professionals signed up to beat stress. Read full article

Read about last year's Hedge Fund Fight Night

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Hedge Funds and ETFs

Brokers Looking to Replace Hedge Funds with ETFs

Brokers are trying to lure investors away from hedge funds by pushing exchange-traded funds (ETFs). The main advantage to hedge fund investors is that ETFs allow investors to easily withdraw money from the fund, whereas many hedge funds had agreements with limited partners barring quick redemptions when the fund's performance slides. According to Andrew Lo, exchange-traded funds are a useful alternative to hedge funds which is, "perfectly consistent with the drive towards better diversification and great liquidity."

Traditionally, Barclays and other firms allocated wealthy clients' money among private money managers, hedge funds and other exclusive products. But with the proliferation of ETFs of all varieties -- and the poor performance of many high-priced money managers during last year's turmoil -- simpler products are gaining in popularity.

"There are a lot more ETFs in different asset classes than they had been in the past, and they're becoming more nuanced," said Sean Crawford, portfolio manager of the new strategy at Barclays Wealth, which oversees $221 billion (135.4 billion pounds) for clients. "It's become a pretty compelling investment idea."

There's plenty of money waiting on the sidelines for a better investment mousetrap. As markets crashed last year, investors became increasingly disenchanted with hedge funds. They pulled about $800 billion out of such investments between July 1, 2008, and June 30, 2009, according to research firm HedgeFund.net, which tracks the industry. Source

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Capital Raising Resources Combined

Capital Raising Resources

Hedge Fund Premium and HedgeData have joined up to offer a discounted package of fund marketing tools.

To learn more about these tools please click here to read the 1 page PDF description.

You may also view the embedded PDF below:

3 Speakers - Free Boston, MA Hedge Fund Networking Event

Boston Hedge Fund Event On May 6th

We are now offering events in both New York City on Tuesday May 4th and Boston on Thursday May 6th. For the NYC event please click here. For details on the Boston event please see below.

The Hedge Fund Group is offering a hedge fund networking event at the Harvard Club in downtown Boston on Thursday May 6th, 2010. The event will have a $0 entry fee and last from 5:30-7:30PM. Appetizers will be included at the event along with a cash bar. This event is being sponsored by Armor Compliance and TradeStation Prime Services.

At the beginning of the event we will have 2 short 20 minutes talks on Hedge Fund Marketing Feedback Systems and the growing role of Chief Compliance Officers within the current regulatory environment. After these two talks we will have open networking for the remaining 1 hour and 20 minutes. After the event interested participants may all go across the street to a restaurant or bar for further networking if there is interest.

What: Free to attend networking event for hedge fund principals, employees, marketers and investors.

Where: Harvard Club (see address below)

One Federal Street
Boston, MA 02110

When: Thursday May 6th, 2010 from 5:30-7:30PM EST

If you would like to attend this event please make sure and RSVP below. There are only 60 spaces available for this event and traditionally we have 80-100 professionals attending these types of networking events.

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New York City Hedge Fund Marketing Seminar

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Hedge Funds 1 Year to Register

New Bill Proposes Giving Hedge Funds 1 Year to Register

The House Financial Services Committee has passed a bill that will give hedge funds a year to register with Securities and Exchange Commission. The drafter of the proposal said that the grace period is necessary because both fund managers and the SEC will need time to prepare for the new work required for registering and examining the funds.

Hedge-fund managers and private-equity managers would be given a one-year transitional period before being required to register and open up their books to periodic examinations by the Securities and Exchange Commission, according to a measure approved by the House Financial Services Committee on Tuesday. Rep. Susan Kosmas, D-Fla., the drafter of the measure, said a one-year transition period for registration is necessary because both the SEC and fund managers will need time to organize themselves. "The SEC will need time to prepare for the additional responsibilities that will come from the registration of potentially thousands of new managers," said Kosmas. She added that managers will need time to set up formal compliance programs, hire chief compliance officers, all of which is required by the legislation. Source

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Hedge Funds to Recoup Losses

Hedge Funds Close to Recouping Crisis Losses

Hedge funds took massive losses throughout the financial crisis, but now most hedge funds are very close to recouping these losses. Last week, the average hedge fund needed just a 2% gain to get back to its value at the peak of the last boom in 2007.

This will allow many hedge funds to earn performance fees once again. A 2% gain is pretty reasonable given overall hedge fund performance in 2009. If the hedge fund industry continues to recover at its current rate it will exceed the highest level of two years ago by the end of next month. Funds have generated average returns of 18.3% this year to Oct. 21.

A return to the previous top is vital for managers, because only after hitting the level again -- known as the high-water mark -- can they earn 20% of fresh profits. The fact that global shares, as represented by the MSCI World index, have to claw back 27% after their slump in 2008 is little comfort for managers still under water.

Christopher Miller, CEO of Allenbridge Hedgeinfo, said the industry was now "tantalizingly close" to pre-crunch levels. "It seems managers have regained their self-confidence," said Rickard Lundquist, a portfolio strategist.

Equities-focused managers are still 9% short, and multi-strategy managers must still add 4%. Global macro funds, which aim to bet on broad global trends, are 15% above their mid-2007 level after making 4.8% last year amid strong market trends they could exploit. And, despite losing 16% this year as shares rose, short sellers' gains in 2008 leave them 14% above pre-crunch levels. Source

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Hedge Fund Prices Fall

September Hedge Fund Prices Fall for Fourth Month

Hedgebay Trading Corporation, which provides a platform for trading stakes in hedge funds, has announced that September transactions represented the fourth monthly fall in prices for funds. Transactions last month were at an average discount to net asset value of 17%, compared to 12% in the previous month. Despite a recovery of prices from a record 20% discount, investors are being careful not to pay too much for hedge funds.

“The fact that prices declined sharply in September against the backdrop of stable equity markets and the generally strong year-to-date performance of hedge funds is telling,” Hedgebay said in a statement today. “Investors didn’t want to “take the hit.”

Nassau, Bahamas-based Hedgebay said investors typically paid more than net asset value until August 2008, when they started dumping stakes.

The firm has operated a secondary market on which pension plans, endowments and other institutional investors can buy or sell hedge fund holdings since 1999. The volume of trading in September was 25 percent higher than last year and 15 percent higher than in the first nine months of the year, Hedgebay said. Source

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Boston Hedge Fund Networking Event Thursday 10.29.09

Boston Hedge Fund Event On May 6th

We are now offering events in both New York City on Tuesday May 4th and Boston on Thursday May 6th. For the NYC event please click here. For details on the Boston event please see below.

The Hedge Fund Group is offering a hedge fund networking event at the Harvard Club in downtown Boston on Thursday May 6th, 2010. The event will have a $0 entry fee and last from 5:30-7:30PM. Appetizers will be included at the event along with a cash bar. This event is being sponsored by Armor Compliance and TradeStation Prime Services.

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New York City Hedge Fund Marketing Seminar

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European Central Bank

Euro Central Bank Warns Against Regulating Hedge Funds

The European Central Bank (ECB) is cautioning against plans by the European Union to regulate hedge funds and private equity firms. The ECB warned that the regulation could put EU companies at a disadvantage. To read more about the proposed Directive on Alternative Investment Fund Managers see this article.

"The ECB supports the intention to provide a harmonised regulatory and supervisory framework for the activities of alternative investment fund managers (AIFMs) in the European Union," it said in an opinion requested by the Council of the European Union.
But the central bank warned that if other countries did not adhere to a common approach, hedge funds could shop around for a new home where they would be subject to fewer controls.

"An internationally coordinated response is necessary given the highly international nature of the industry and the consequent risks of regulatory arbitrage and evasion," the bank said.

The proposed EU rules are an attempt to regulate managers of so-called alternative investment funds sold into the EU, but critics say the rules would increase protectionism and simply incite hedge funds to move elsewhere. Source

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Hedge Fund Registrations and Licenses

Hedge Fund Registrations Question

Do I Need Registrations or Licenses to Open a Fund?

Our team is currently re-writing this article, please check back soon for more information.

- Hedge Fund Blogger Team

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Importance of Copywriting for Capital Raising

Copywriting for Capital Raising

Before starting this article I want to quickly define what copywriting is. Copywriting is the use of words to promote a person, business, opinion or idea.

Copywriting is the most undervalued and overlooked tool that a marketer or sales professional can develop. Many professionals value cold calling skills, networking, branding, or public relations skills but I think that copywriting skills are the most valuable.

Top 5 Reasons Copywriting for Capital Raising is Important:

The headline of your letters, subject line of your emails, and first few words of your speeches are the most important. Crafting a great headline can take hours to complete, but make the difference between being shown to others and never being noticed.
Many hedge funds, family offices, and private equity groups spend over $20,000 worth of their and money on their marketing materials ever year, yet 95% are decisions are based on what's always been done or what sounds good instead of A/B testing results to find what is effective.
Every investment fund markets itself using emails and investor letters. Without copywriting skills you may not only be failing to connect with your audience but you could actually be turning them off and pushing clients away.
Investment funds of all types are started by successful traders and portfolio managers, very few are started only by marketers. By this nature of how the business if founded and grown niche marketing practices such as copywriting are often overlooked or seen as something that they are above.
99% of your competitors are not using copywriting best practices

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Hedge Fund Industry & Strategy Explanations

Hedge Fund Explanations

Below is a 11 minute video from Steven Bell on hedge funds. This video explains what hedge funds do on a very generalized high level and then it goes into various investment strategies that hedge funds commonly employ. If you are reading this via RSS or email please click here to watch the video.

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Hedge Fund Biden

Hedge Fund Suit Against VP Biden's Son and Brothe

A Manhattan state Supreme Court Justice has thrown out a lawsuit against two of Vice President Joseph R. Biden's family members. The case surrounds the VP's son Hunter Biden and brother James Biden, specifically their purchase of a hedge fund in 2006, which left one investor angry enough to sue the Bidens. Justice Bernard J. Fried threw out the suit because the plaintiff Stephane Farouze failed to make an adequate case "with any meaningful degree of particularity."

Mr. Farouze, now the global head of fund derivatives for Deutsche Bank, filed his $10 million suit against the Bidens and their former business associate Anthony Lotito Jr. in 2008.

Mr. Farouze, who is based in London, said they schemed to gain control of his interest in the hedge fund, Paradigm Companies, without buying him out. The Bidens’ camp said Mr. Farouze never really owned the roughly 31 percent share he offered to sell them.

The Bidens’ lawyer, Nicholas Gravante Jr., said they ”are grateful that they have been vindicated and that this case is now behind them.”

Mr. Lotito sued the Bidens separately over the Paradigm purchase. The two sides reached a settlement with confidential terms last December.

Mr. Lotito had claimed the Bidens negotiated their own deal to buy the hedge funds behind his back and cheated him out of money. The Bidens had said he misrepresented himself and denied any wrongdoing. Source

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Hedge Fund Past Performance

How Do I Use Past Performance When Marketing a Fund?

Our team is currently re-writing this article, please check back soon for more information.

- Hedge Fund Blogger Team

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Galleon Group Investors

Investors Flee Galleon Group after Insider Trading Charges

Raj Rajaratnam, portfolio manager at Galleon Group, has been charged with insider trading. Investors are now fleeing Galleon Group despite Mr. Rajaratnam denying the charges. Investors are reported to be requesting $1.3 billion in redemptions of the $3.7 billion Galleon manages. To learn more about this story please see Raj Rajaratnam Facing Insider Trading Charges. The following video gives some more details on this developing story. If you are reading this via RSS or email please click here to watch the video.

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Get Your Hedge Fund Mentioned in My Book

Hedge Fund Book Interviews

Want to have your fund mentioned in my book?

I am currently writing a book to be published in May 2010 by Wiley. The book will be called, "The Hedge Fund Book: A Training Manual for Hedge Fund Professionals and Capital Raising Executives"

I am in need of some additional hedge fund manager interviews to create more case studies for this book. If you are a hedge fund manager, or work for a hedge fund or fund of hedge fund and would be open to an anonymous or open name email or phone based interview we would love to include some of the challenges you have overcome, lessons you have learned, or resources discovered within my book.

If you are open to such an interview please email me today at Richard@HedgeFundGroup.org.

Bonus: Anyone who completes an email-based interview for my book can gain free access to Hedge Fund Premium for 1 year ($327 Value)

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Brazilian Hedge Funds Return

Brazilian Hedge Funds Make Up for Losses in 2008

Hedge funds in Brazil have bounced back in a big way after record redemptions in 2008. Hedge funds have drawn more capital than any other investment pool in Brazil. Last year, investors withdrew 54.6 billion reais from hedge funds but Brazilian hedge funds have raised a net 33.7 billion reais (about $19.7 billion) this year through Oct. 15.

Local hedge funds had a great third quarter this year, raising 36.3 billion reais. Another sign of a strong recovery is that the Bloomberg Active Index of Brazilian hedge funds (tracking the performance of more than 1,000 hedge funds) has risen by 44% this year through October 12.

A Brazilian equities rally and record low interest rates are also spurring demand for higher-yielding assets. The Bovespa stock index rose 1.6 percent today to 67,239.45, extending a gain this year to 79 percent.

Brazil’s 326 billion-real hedge fund industry received more money than any fund group in Brazil so far this year, according to Anbid. Funds that invest in asset-backed securities came second with a net inflow of 13 billion reais, followed by fixed- income funds, which recorded 9.8 billion reais in inflows through Oct. 15, Anbid data show.

The Bloomberg index of Brazilian hedge funds, known locally as multimercados, fell 15 percent last year, less than half the 41 percent drop of the Bovespa index. The average global hedge fund’s holdings, as measured by the HFRX Global Index, rose 12 percent this year through Oct. 15. The gauge is still 17 percent below a record set July 13, 2007. Source

Read our 1 Page Guide to Brazilian hedge funds with more than a dozen unique resources as well as first-hand commentary from my visits to Brazil.

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Fund of Funds Due Diligence

Due Diligence for Fund of Funds Investing in Hedge Funds

The scandals and collapses in the financial industry has left many investors questioning the effectiveness of their due diligence practices. Managers and investors in the fund of funds industry certainly have reason to step back and reexamine their due diligence, as they discovered that they were not as insulated from the crisis as they had hoped. Fund of funds are intended to offer a greater level of diversification than investing in a single hedge fund but last year many fund of funds turned out to be just as vulnerable as traditional hedge funds.

According to Daniel Strachman and Richard Bookbinder, the authors of Fund of Funds Investing: A Roadmap to Portfolio Diversification, due diligence is not a failed practice, rather it is the solution. Many fund of funds simply followed the crowd toward the hot new hedge fund without fully understanding its strategy and how to diversify that portfolio investment. A great deal of this responsibility falls on the investors, say Strachman and Bookbinder.

...it's the responsibility of the investor to follow up and confirm whether or not those answers are true. This is not something that stops once the investment has been made; it is something that is ongoing and should be done continuously. Funds of funds get paid for post-investment monitoring and review.

The lesson we've learned is not that not all hedge funds are bad, not all funds of funds are evil, and not all separately managed accounts are negative. What we've learned is that we must do due diligence. ...because of the pace of growth in the industry and the pace of growth of those providing services to the industry, we think that due diligence has been lacking because people just did not feel they had to do the work.

Due diligence involves understanding how money is being managed, by whom, and who is checking on it to make sure the data are correct. It's about asking questions, getting answers, making sure the answers are understood, and making sure that what you see is really what you get.

Read the full article

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Hedge Funds in Congress

Hedge Funds Gaining Influence on Capital Hill

The hedge fund industry is gaining greater pull on capitol hill, an important development as the financial industry is facing more government regulation. Hedge funds have some powerful tools at their disposal: A former congressman willing to lobby on the industry's behalf, the potential return on campaign contributions and a strategy of shaping reform in a way that does not harm hedge funds too severely.

After taking heaps of criticism from various public figures, from President Obama to Chairman Ben Bernanke, the hedge fund industry is working to promote friendlier legislation. Rather than ignoring the political process, hedge funds have taken a more active role by advising the committees and debating the details of any new regulation. Importantly, hedge funds have reluctantly agreed to a requirement that all funds register with the Securities and Exchange Commission, giving the federal regulators unprecedented access to the hedge fund industry. An important asset is the new president of Managed Fund Association, the industry's trade group. Last year, the group hired Richard Baker, a former Republican congressman. Mr. Baker advocates for a more cooperative but aggressive strategy in molding the new rules.

“We are no longer something that can be ignored by regulators or by the Congress,’’ Mr. Baker told The Globe in an interview. He said many lawmakers know little about hedge funds, leading his organization to address a “dramatic need for education on the Hill.’’

Since his one-year ban on lobbying Congress expired early this year, Mr. Baker wrote, “I have held scores of meetings with my former colleagues.’’ Mr. Baker reported that he was able to “receive a receptive ear.’’ But he warned the hedge fund traders to be vigilant because there is “never . . . a cessation of hostilities’’ in politics.

Mr. Frank, one of the most liberal members of Congress, said Mr. Baker, his former colleague on the Financial Services Committee, has been “a very reasonable guy.’’ Now, as Mr. Frank’s committee meets this week and next to finalize its version of financial regulation legislation, Mr. Baker’s strategy is being put to a crucial test. Source

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EU Hedge Fund Regulation

EU Directive Could Cost Hedge Funds £2.9 billion

The European Union's new bill, the Directive on Alternative Investment Fund Managers, is expected to cost hedge funds and private equity firms up to £2.9 billion ($4.7 billion). Also, alternative investment firms will have to shoulder annual costs estimated around £283 ($463 million). The combination of a costly registration, having to adhere to greater disclosure requirements, and the limiting of leverage make for a harsh legislation targeting alternative assets that could have significant effect on other industries as well.

The study, conducted by Charles River Associates for City watchdog the FSA, also said the affected firms would be hit with annual costs of around €311m. The EU is planning to force fund managers to sign up to a costly registration and disclosure regime, and to adhere to caps on leverage.

Hedge funds would bear the brunt, paying €1.4bn in one-off costs to comply with the directive. Private equity firms face one-off costs of up to €756m, but they would bear the largest ongoing costs, totalling €248m a year, the study found. And the report said that pension funds would be £1bn a year worse-off under the EU proposals. Source

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Raj Rajaratnam Facing Insider Trading Charges

Raj Rajaratnam Insider Trading Charges

Below is a short excerpt from an article announcing that Raj Rajaratnam, portfolio manager at Galleon Group has been charged with insider trading. This trial will probably takes years to come to conclusion, but it is another blow to the industry which is trying to re-build investor confidence.

One of America's wealthiest men was among six hedge fund managers and corporate executives arrested Friday in a hedge fund insider trading case that authorities say generated more than $25 million in illegal profits and was a wake-up call for Wall Street.

Raj Rajaratnam, a portfolio manager for Galleon Group, a hedge fund with up to $7 billion in assets under management, was accused of conspiring with others to use insider information to trade securities in several publicly traded companies, including Google Inc.

U.S. Magistrate Judge Douglas F. Eaton set bail at $100 million to be secured by $20 million in collateral despite a request by prosecutors to deny bail. He also ordered Rajaratnam, who has both U.S. and Sri Lankan citizenship, to stay within 110 miles of New York City. source

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Tags: Raj Rajaratnam, Raj Rajaratnam Insider Trading, Insider Trading Case Against Raj Rajaratnam, Galleon Group, Galleon Group Hedge Fund Assets,

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