HedgeFundBlogger.com | New Years Resolutions 2009

New Years Resolutions

HedgeFundBlogger.com | New Years Resolutions 2009

HedgeFundBlogger.com | New Years Resolutions 2009By clicking here you may read what I wrote up as my new years resolutions for HedgeFundBlogger.com. I had 5 resolutions for 2008 and met 4 of them.

Top 5 New Years Resolutions for 2009:
  1. Publish 200 more educational niche articles on hedge fund startups, marketing, raising capital from hedge funds, hedge fund careers and selection of hedge fund service providers.
  2. Publish at least one original video or audio piece on hedge funds to HedgeFundBlogger.com every 3 weeks.
  3. Increase my traffic from 280,000 pageviews a month to 500,000 pageviews a month.
  4. Increase total subscribers to my HedgeFundBlogger.com from 22,600 to 100,000
  5. Publish over 100 Q & A pieces to add more of an ongoing conversation within the blog - using the email inquiries I commonly receive and answers I commonly write up.
Thank you for everyone's support over the past few years. I built this blog on a very part time basis for a long time and just 6 months ago now quit my full time hedge fund / investment marketing consultant position to work for myself running HedgeFundBlogger.com provide consulting services to a few hedge fund managers and run the Hedge Fund Group (HFG). If you see any way to improve the site please do send in your notes or leave a comment below.

Happy New Years.

- Richard

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Liquidating Hedge Fund Investments | Redemptions

Liquidating Hedge Fund Investments

Liquidating Hedge Fund Investments | Redemptions

Liquidating Hedge Fund Investments | RedemptionsWhile 10-15% of all hedge funds may need to have gates and extended lock-up periods I strongly agree with the below view by Paulson:

"John Paulson, who runs the $36 billion hedge-fund firm Paulson & Co., has some harsh words for his peers and their tendency this year to block or curb clients’ attempts to get their money back.

“We think it’s a mistake for managers to use gates and other tools to limit investor access to their funds,” Paulson wrote in a 2009 outlook to investors. “While we recognize the difficulties of the current environment, we think it is a manager’s responsibility to raise liquidity to meet the redemption needs of their investors.”source"

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Adding a Second Prime Broker | Changing Prime Brokers

Adding a Second Prime Broker

Adding a Second Prime Broker

Adding A Second Prime Broker | Hedge Fund NotesWhile looking for a client document online I found a white paper on prime brokerage which discusses the use of multi prime brokerage firms by a single hedge fund.

This white paper claims that the benefits of adding a second prime broker include:
  • Mitigation of risk: counterparty, financing, liquidity and operational
  • An additional source of alpha-generating trade ideas, capital
    introductions, etc.
  • Ensure optimal financing through competitive pricing of
    margin lending and stock loan
  • Gain access to competitive or innovative cross-margining
    policies of the competing prime broker
  • Leverage across the relative strengths of service providers
    in synthetic financing, swap trading or market access
  • Catalyst for reduced dependency on outside service
    providers, giving greater direct operational control
This full white paper may be read here. To contact prime brokerage firms who have helped support this website please see our service provider directory listing of them here: Prime Brokers

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Components of a Family Office | Family Office Services

Components of a Family Office

Components of a Family Office | Services by Family OfficesI just came across an educational PowerPoint presentation by a US-based family office firm. Within this powerpoint I found a list of services which are provided by family offices. For those of you who are selling to family offices, about to work for a family office or are looking to soon engage a family office this list could be useful.
  • Tax Compliance, Planning and Preparation
  • Investment Policy and Asset Allocation
  • Portfolio Strategy and Manager Selection
  • Portfolio Accounting
  • Investment Performance Monitoring
  • Alternative Investment Tracking (Hedge Funds, Real Estate & Private Equity)
  • Trading
  • Bookkeeping and Bill Payment
  • Financial Reporting
  • Cash Flow Management
  • Estate and Wealth Transfer Management
  • Insurance and Risk Management
  • Foundation and Philanthropy Management
  • Personal Finance Management
  • Concierge Services
  • Data and Document Management
If you are interested in viewing the full PowerPoint presentation you may find it by clicking here. I hope this was helpful, here are links to additional resources on family offices:
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Understanding Hedge Funds | Video Definition

Understanding Hedge Funds

Understanding Hedge Funds | Video Definition

Watch over 100 additional videos on hedge funds here: 100+ Hedge Fund Videos

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Bernard Madoff Hedge Fund Manager Notes

Bernard Madoff

Bernard Madoff Hedge Fund Manager Notes

Bernard Madoff Hedge Fund Manager NotesJust came across another post on the Madoff fraud case. This article is by Veryan Allen, here is an excerpt:
Bernie Madoff was a stock broker "managing" client accounts. He was never part of the hedge fund industry. His firm was "regulated" and fraud is already illegal. He did not charge 2 and 20 and had no prime broker, proper auditor or independent administrator. Few professional investors invested directly with so many red flags in abundance. Due diligence is an alpha source itself. And portfolio diversification with NUMEROUS strategies and managers is mandatory. read more...

Additional Information on Bernard Madoff

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Prime Brokerage Risk | Risks of Single Priming

Prime Brokerage Risk

Prime Brokerage Risk | Risks of Single Priming

Prime Brokerage RiskBelow is a short excerpt from an article I found on why hedge funds are now working with multiple prime brokers at one time. I believe this model will become even more important in 2009 and possibly become a required checkbox for investments from many institutional investors or a green light from institutional consultants.

Why It's Important: With the demise of Bear Stearns in March 2008 and the bankruptcy of Lehman Brothers this past September, hedge funds that had prime brokerage relationships with these firms were exposed to significant counterparty risk. Some hedge funds that primed with Lehman had their assets frozen as part of the European bankruptcy proceedings against Lehman, driving some to liquidate securities to meet redemption calls from investors and even forcing some out of business. "There are people who either had long assets on deposit and can't get them back or, worse, Lehman borrowed the assets and lent them out," explains Larry Tabb, founder and CEO of TABB Group.

Where the Industry Is Now: Most hedge funds with more than $250 million in assets have relationships with two to four primes, which are picked for their trading expertise in certain asset classes (e.g., FX or derivatives) or geographies, such as Europe or Asia. For smaller hedge funds, however, diversifying can be difficult because the large prime brokers have minimum-asset requirements and other constraints to weed out the smaller players. Smaller hedge funds, with $10 to $15 million in AUM, typically launch with a single prime broker that may provide trading systems, margin accounts, stock loans and clearing. source

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Hedge Fund Backers | A List of Capital Sources for Hedge Funds

Hedge Fund Backers

Hedge Fund Backers | Capital Raising

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Hedge Fund Ethics | A New Code

Hedge Fund Ethics

Hedge Fund Ethics | A New Code

The downturn of the markets, recent fraud cases and pending regulatory changes the time is ripe for a widely accepted set of principles to act by. I would like to start a discussion here on what such a code of ethics for hedge funds should include. There are some financial non-profit groups which have proposed standards but their interests are diverse and many of them do not work within the hedge fund industry.

By working with the 50 Advisory Board members of the Hedge Fund Group (HFG) and visitors to this site I would like to help put together a brief and simple code of ethics for the hedge fund industry. The end product would be actively promoted through many hedge fund related websites, discussed with hundreds of hedge fund managers and required as part of the CHA Designation Program.

Please comment below with any input you may have on this process, insight on what should be included or interest in applying to become part of the Hedge Fund Group (HFG) Board of Advisors.

Tags: Hedge Fund Ethics, Hedge Funds Ethics, Hedge Fund Industry Ethics, Ethics Code for Hedge Funds, Hedge Fund Group (HFG) Code of Conduct Ethics Guide

Christmas Eve Link Fest on Hedge Funds

Christmas Eve Linkfest

Christmas Eve Hedge Fund Linkfest

For those of you like me who always want to stay on the ball but can't work 10 hours/day over the holidays, here is a concise run down on recent hedge fund events and stories in the industry:
  1. A former stockbroker who was fined $350,000 in 2006 for his role in a Ponzi scheme allegedly conspired with New York lawyer Marc Dreier to defraud hedge funds out of more than $100 million, according to a criminal complaint unsealed Tuesday. source
  2. Rene-Thierry Magon de la Villehuchet, a founder of the hedge fund Access International Advisors, was found dead Tuesday in his office in Manhattan. His fund reportedly lost as much as $1.4 billion that had been invested with Bernard L. Madoff, the money manager accused of running a $50 billion Ponzi scheme. source
  3. The property market collapse still has two years to run and will not bottom out until prices are 35% below their peak, a leading City forecaster warned today. source
  4. Blackstone Group LP (BX.N) said on Tuesday it plans to liquidate two hedge funds as a lack of outside investing amid tight credit markets will prevent them from getting big enough to be meaningful to the company.

    The private equity firm plans to consolidate its distressed securities fund with GSO Capital Partners, a hedge fund manager it acquired in March for $10 billion. source

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7 Changes to The Hedge Fund Industry

7 Changes to The Hedge Fund Industry

I just found an article from the Wall Street Journal on how the current financial crisis will be changing hedge funds.

Here are the 7 ways in which the WSJ sees the industry changing:
  1. Liquidity will become more of an ongoing concern
  2. Fees will be scrutinized more
  3. Modification of high water marks
  4. Intensified regulations
  5. Industry Consolidation
  6. Fund of funds will struggle
  7. Unlevered returns should improve
For the full article on these 7 coming changes please click here.

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What is a Family Office? | Wealth Management

What is a Family Office?

What is a Family Office? | Wealth Management

I just found a PDF on family offices which lays out 5 differences between wealth management firms and family offices. Since I get many questions related to what family offices do and how marketers can reach them I thought this list may help:

Top 5 Differences Between Wealth Management & Family Offices
  1. Clients informed of all the risks and advantages of every decision, thus empowering them to understand the impact of the choices they make and the effect on their long-term goals. They provide sophisticated investment advice and
  2. implementation to meet the customized needs of taxable families with complex wealth structures. They add value by working collaboratively,
  3. combining internal resources with a client’s team of advisors to develop unique solutions to challenges that cross disciplines, such as estate, tax, risk management and similar fields.They provide leadership in family governance and
  4. education, a critical factor in preparing future generations for the complex obligations of wealth management and preservation. They take care of the day-to-day demands that
  5. wealth can impose, relieving family members of many routine worries and burdens.
Read more about family offices or read the rest of this PDF here.

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Bernard Madoff Fraud | Auditings & Due Diligence

Bernard Madoff Fraud

Bernard Madoff Fraud | Auditings & Due Diligence

Quick Links: Bernard Madoff Hedge Fund Risks | Fund of Fund Letter

Bernard Madoff Hedge Fund Fraud Case Summary

Below is an excerpt from a recent Time article on the Madoff scandal from an auditors perspective. Many groups are pointing fingers at the auditing and due diligence firms which provided clean bills of health to Madoff's funds and connected feeder funds prior to discovering his fraudulent activities last week.

Here are two excerpts from this article:
Add the nation's largest accounting firms to the list of watchdogs and regulators that didn't catch the multibillion-dollar Madoff investment scam.

KPMG, PricewaterhouseCoopers, BDO Seidman and McGladrey & Pullen all gave clean bills of health to the numerous funds that invested with Bernard Madoff and his asset-management firm. Clients say the large accounting firms signed off on statements that said the Madoff investment vehicles had billions of dollars in assets as well as an unlikely track record showing years of always-positive returns. The billions have vanished, and the impressive returns now look to have been made up...

Accountant Ronald Niemaszyk, whose firm, Jordan Patke & Associates, specializes in reviewing the books of hedge funds, agrees that in many cases it is common to rely on brokerage statements when auditing funds. But in this case, Niemaszyk says, the auditors most likely should have looked deeper. "You have to look at the auditors' work that you are relying on," he says. What's more, Madoff acted as his own broker instead of going through another firm.

Niemaszyk says it is up to auditors to decide how far they go to verify a fund's assets and trades. But the fact that Madoff used an unknown auditor and was reporting his own trades probably should have prompted the auditing firms to do more than usual to check that the fund's assets were indeed there.
Read the full article by clicking here.

One of the experts in this article, Ron Niemaszyk helps supports HedgeFundBlogger.com. You may read about his firm's services on his own website here.

Read more about the Madoff Case here:

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Hedge Funds Definition | Myths, Facts & Trends

Hedge Funds Definition

Hedge Funds Definition | Myths, Facts & Trends

(http://HedgeFundBlogger.com) I just found a great informational report on hedge funds put out by Hedge Info. This report identifies top industry trends as:
  • Deleveraging & redemption notices
  • Redemptions + lossing = further losses
  • Change brings opportunity
  • The 3 D's - Diversification, Darwinism and Due Diligence
Why hedge funds are popular in the first place:
  • Producing above market returns over long periods of time
  • The appeal of relatively uncorrelated returns
  • Access to unique or illiquid asset classes only available to those with large amounts of capital or specialized knowledge
What is going to happen (according to this report)
  • More regulation
  • Hedge funds adapting to using less leverage overall
  • Due diligence will be even more important
  • There is a need for a global investment bank / hedge fund risk monitoring organization
If you would like to read this full report please click here.

To learn more about what a hedge fund really is please see our video: What is a Hedge Fund

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New Prime Brokerage Model Emerging

New Prime Brokerage Model

New Prime Brokerage Model Emerging

New Prime Brokerage Model EmergingThe credit crisis and the subject of counter party risk is proving to be the final nail in the coffin for the hedge fund industry's single prime brokerage model. Funds of all sizes now demand multiple custodial relationships.

The problem the high-cost-structure leading prime brokerage firms now face is that without the assurance of the captive single prime model the economics of servicing smaller funds no longer makes sense. This reality combined with the primes' decreased risk tolerance means that we are seeing a mass exodus away from the top-tier primes. Anecdotal evidence suggests that these primes are now in the process of weeding out clients that manage less than $100 million or that do not generate annual revenues of at least $250,000. We are also witnessing primes becoming more selective about what type of funds they are willing to service. Funds whose strategies involve less liquid securities and/or high leverage are now finding the bar set much higher.

This retrenchment by the leading prime brokers raises the obvious questions - Who will fill the void and offer prime services to the lower end of the market? Who will provide the financing, stock loan, technology infrastructure etc. necessary for smaller funds to generate alpha?

Before we answer this question let’s take a moment to think about why this smaller hedge fund segment is so key to the future success of the industry. It is no secret that size kills alpha. Many successful funds follow a familiar arc. They gain attention (and funds) by earning outsized returns, as they grow in size their primary strategy reaches capacity and they experience a leveling off of returns. If they are not lucky enough to find another successful strategy, returns will continue to suffer, capital will begin to flow out and ultimately investment talent will go in search of new opportunities. This regeneration process is vital to the health of the industry and for many investors, it is the promise of catching a smaller fund during this growth phase that motivates them to invest.

Historically the group charged with picking up the crumbs left by the leading primes was a group known as the mini-primes. This term is rapidly becoming obsolete as the mini-primes now find themselves expanding their offerings to attract the funds that have been displaced. Two important differences remain: 1 - The mini’s still use the clearing services of their larger prime broker brethren, and 2 - more importantly, their cost-structures evolved in a way that allows them to offer prime services profitably at this lower end of the market. Interestingly we are also seeing a number of new entrants to this expanded segment of the prime brokerage industry. These are for the most part more traditional brokers who see an opportunity to increase the stickiness of their execution services, as well to develop new revenue streams, by building out a prime brokerage offering.

Only time will tell who will be successful in this greatly altered landscape of prime brokerage. The winners will be the firms that understand that the new economics of prime brokerage demand a new industry infrastructure. This prime infrastructure will rely heavily on cost-effective technologies that can offer aggregated multi-prime reporting, as well as real-time views of critical data such as P&L and Risk, right to the desktop of the hedge fund. This restructuring of the prime model will ensure the health of the industry by continuing to offer a relatively low barrier of entry to the all important small hedge fund segment.

Article contributed by Peter Curley of Nirvana Solutions

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Ways Which Hedge Funds Add Value

Benefits of Hedge Funds

List of 4 Hedge Fund Benefits

In the midst of 200 articles on the Bernard Madoff fraud case which you can read about here, I spotted an article by Alphaville spelling out the top 9 ways in which hedge funds add value to the investment industry. Here is a short version of the list:
  1. Providing liquidity
  2. Bursting bubbles
  3. Restore confidence during risky investment periods
  4. Survival of the fittest models
Here is the full article.

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New York Governor David Patterson | Hedge Funds

New York Governor

New York Governor David Patterson | Hedge Funds

This week the Governor of New York announced a number of changes to be made to property tax laws and a hedge fund tax loophole. With much of the hedge fund industry based in New York it will be interesting to see what further measures will be made to help close in on a $15.4B budget deficit. New York is already a relatively expensive place to do business, the state has to be careful to not scare off more hedge fund managers to CT, NJ or elsewhere.

Since the Madoff fraud was exposed many have argued that the poor market returns, the lagging economy, recent fraud cases and pending regulatory actions obviously makes for several challenging years for both small and large hedge funds around the United States.

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Hedge Fund Advertising & Marketing Restrictions | Ideas

Hedge Fund Advertising

Hedge Fund Advertising & Marketing Ideas

Hedge Fund Advertising & Marketing Restrictions | Ideas(http://HedgeFundBlogger.com)There are many restrictions on hedge fund advertising and marketing. Due to the broad mandates and relatively lenient registration and disclosure rules hedge funds in the United States are only allowed to accept investments from accredited investors and institutions.

While this means hedge funds cannot take out TV or radio commercials there are many more gray areas where many hedge funds are now “promoting” or “branding” themselves. I never provide financial advice on HedgeFundBlogger.com and this is surely not a recommended or list of “safe” ways to market your fund. No matter what you hear from a consultant or at a conference always check with your own compliance officer or legal counsel before taking any action. Here is a list of ways in which funds are currently marketing their strategies:

Websites – Many funds have websites describing their firm and investment strategy. Some go as far as to explain what their strategy is in detail along with their current assets under management and who is on their portfolio management team. These websites may cost between $1,000 and $25,000 to create and generally $30-500/month to maintain. A few hedge fund managers even run blogs.

Public Relations Professionals – Many hedge funds actively engage public relations firms to help increase the number of quotes or in-story mentions their fund’s executives get placed within mainstream media outlets. These consultants may work on some one-off crisis management projects for a premium but generally prefer $2-12k/month retainers instead.

Book Publishing – One of the many ways which hedge fund managers are promoting their businesses is through publishing books on the topic of hedge funds. These books may be on industry trends, portfolio management theories or one’s experience in the industry. Many professionals within the wealth management space are hungry to learn more about hedge funds and books which bridge the gap between what can be learned within editorial articles versus an educational book. Some niche publishers will publish books by hedge fund managers but most avoid publishing anyone who doesn’t have a marketing network or a real “media brand” behind their name which has been built up for several years. Due to this fact some hedge fund managers self-publish their own books through programs such as Lulu.com.

Conferences – One of the ways in which hedge fund managers market themselves each week is by speaking at conferences and events within the industry. These events could discuss marketing and sales, hedge funds in general or be on niche subjects related to family offices or activist investing. This strategy can be highly effective because it can support and serve as a direct marketing arm for the strategies mentioned above. Most speaking engagements do not pay, but many firms will at least cover your expenses and display your logo and name prominently at the event. Broker dealer conferences can also be productive events for hedge fund managers to attend. If you can gain a distribution agreement with HNW-focused broker-dealer and obtain a speaking engagement or booth at their event it can be a great way to get your foot in the door with some new face-to-face relationships with HNW advisors with the specific broker-deal group holding the conference.

External Consultants – While not technically advertising, thousands of funds choose to use the help of external consultants to help market their hedge funds. These consultants could be experts within raising capital within a specific channel, creating marketing materials or creating a marketing message. Those consultants who take on whole or partial responsibility for raising assets on behalf of the hedge fund manager are often referred to as third party marketers. To read my past articles on these types of marketers please click here or see my website dedicated to this subject – http://ThirdPartyMarketing.com. Naturally, it is important to complete thorough due diligence upon any groups which you ask to represent you in the market for both effectiveness and compliance reasons. Do not simply sign-up with someone to represent your hedge fund simply because they promise that they can raise the assets which you have been looking to raise.

There are many other ways to market and grow your hedge fund which are not related to advertising or traditional marketing but most of these fall under more traditional means or external consultants. If you have any unique ideas or have heard of any other effective methods that fast growing hedge funds have used, please send them in by email or simply leave a comment below.

Read over 50 additional articles within our Hedge Fund Marketing Tips section by clicking here.

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Bernard Madoff Hedge Fund Risks | Fund of Fund Letter

Bernard Madoff

Bernard Madoff Hedge Fund Risks | Letter

Quick Link: Bernard Madoff Hedge Fund Fraud Case Summary

Related to the Bernard Madoff hedge fund fraud case
- A hedge fund investor just sent me a letter he received from his hedge fund of fund. This is interesting because funds are learning to react very quickly to these types of fraud events to separate themselves from the situation. It also points out that Madoff's hedge fund traded through and was its own custodian of the assets of their own hedge fund - a often frowned upon approach which most hedge funds do not use.

Here is the letter:

As many of you are aware, yesterday evening the SEC initiated proceedings against Bernard L. Madoff and Bernard L. Madoff Investment Securities LLC. We wish to communicate that our hedge fund of funds do not currently have nor have they ever had direct investments with any of the aforementioned entities.

We are familiar with the split-strike conversion strategy the Madoff funds employed. In our judgment, the reported returns of the Madoff funds exceeded what can be reasonably expected from the strategy. Since the return profile could not be explained to our satisfaction, we did not consider the fund for investment.

In addition, Madoff's organization was the investment advisor, prime broker/custodian, and executed all the fund's trades through his broker dealer. Our due diligence process precludes us from doing business with funds that are set up with the limited oversight implicit in such a structure.

The efforts of sound investment research and operational due diligence are important in
any market environment. The market environment we are currently experiencing exposes the strengths and weaknesses of those efforts. We will continue to work to protect our limited partners and their assets.

Please feel free to contact me or any member of our team with questions or comments.

Read our profile on the Benard Madoff Hedge Fund Fraud case by clicking here.

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CAIA Forum | Forums for the CAIA Program

CAIA Forum

The 1 Page Guide to CAIA Forums

CAIA Forum | Forums for the CAIA ProgramWhen taking the CAIA examination, a candidate may wish to combine various ways of studying and learning. One useful tool is the CAIA forum. There are actually many different CAIA Forums that a candidate can access and they vary significantly on information discussed.

The CAIA association itself has somewhat of a CAIA forum available to candidates and visitors. The CAIA forum here is broken down into a bibliography sub-divided by the different classes of alternative investments. There are individual forums which address hedge funds, commodities, managed futures, private equity, real estate, and risk management. Each one of the categories provides resources which address some of the current hot topics within the alternative investment universe. The available resources are searchable as well.

www.caiaexam.com provides a CAIA forum that allows candidates to discuss CAIA related material based on 4 different topics. There is a CAIA general discussion that focuses on the program in general. There are CAIA level I and Level II discussions which allow visitors to concentrate on each level of the examination specifically. There is also a career discussion which allows visitors to concentrate on career advice and how it relates to the CAIA. This seems to be a very new site but it may grow into something unique and valuable over the next few years.

www.analystforum.com has had a large presence within the CFA forum for a quite a while. They are currently in the process of launching a CAIA forum as well. Analystforum.com will most likely be providing a similar variety of sub-categories within the CAIA forum. The categories should have a test preparatory section, a CAIA forum to discuss current topics with the alternative investment universe, a forum to discuss relevant articles, a forum to view study material available for the CAIA examination before purchasing it, a forum which discusses CAIA careers, and a CAIA forum which provides links to valuable resources and societies.

Beyond the CAIA forums already mentioned in this article, there are many other CAIA forums available to candidates and those interested in the CAIA. By searching the internet via Google or yahoo, one can find a CAIA forum on almost any relevant topic concerning the CAIA and its examinations.

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CAIA Analyst | CAIA Alternative Investment Analysts

CAIA Analyst

CAIA Alternative Investment Analysts

CAIA Analyst | CAIA Alternative Investment AnalystsWhen taking the CAIA examination, a candidate may consider some of the available positions for a CAIA designee. A CAIA Analyst is a position which is often discussed. CAIA stands for Chartered Alternative Investment Analyst so CAIA analyst position can be viewed as being multiple things. In its simplest form, a CAIA Analyst could be an individual who has passed the CAIA due to the fact that the designation itself carries the analyst title. Another option is that CAIA analyst is the position one would hold as an Analyst for the CAIA association itself.

The CAIA analyst jobs range from entry level positions to current professionals to the highest level industry managers. Some of the more typical CAIA jobs are hedge fund portfolio manager, business analyst, managing director, chief information officer, senior investment officer, head of derivative structuring, chief financial officer, and senior vice president. The most obvious advantage of becoming a CAIA charterholders is it’s concentration within the alternative investments field. Some of the top providers of CAIA jobs are hedge funds, private practices and firms, companies, foundations and trusts, colleges and universities, pensions, and state and local governments.

The business analyst title is most often associated with the CAIA analyst position. A business analyst would be responsible for providing detailed business process and financial accounting analysis, gathering business needs and translates these needs into functional specification for projects, producing deliverables such as requirements documents, application prototypes, flow charts, process documentation, feasibility and trade-off analysis of different process and solution options, and translating business needs into functional requirements and provide direction on financial principals and reporting requirements. These requirements would be concentrated within the alternative investment universe for a CAIA analyst.Within the CAIA institute, a CAIA Analyst would have job possibilities in curriculum development, examination development, member services, candidate services, marketing and industry relations, association operations, information technology. Within the CAIA institute there are job opportunities in many different areas of expertise contained inside the alternative investment arena. Most positions within the CAIA institute require the prospective employee to hold the CAIA designation or be willing to obtain it within 18 months of employment.Most CAIA analyst jobs center around the alternative investment world (hence the name of the designation) in positions that concentrate on hedge funds, venture capital, private equity and real estate investment. As alternative investments become more and more popular, one may expect the job opportunities to grown in turn.

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CQF Finance | Quantitative Finance Certificate

CQF Finance Program

CQF Finance | Quantitative Finance Certificate

CQF Finance | Quantitative Finance CertificateThe Wilmott CQF Finance (certificate in quantitative finance) was designed by Doctor Paul Wilmott in 2003. The designation is aimed at providing a high level training for professionals working in, or intending to move into, derivatives and risk management. The program consists of 6 modules which each cover a different area of quantitative finance. The course was designed for those who are currently employed full time to allow for studying outside of the office.

The modules which the course will concentrate on are the basic building blocks of finance theory and practice, risk and return, equity/currency/commodity derivatives, interest rates and products, credit products and risk, and advanced topics. Each module covers a different aspect of quantitative finance and consists of lectures, discussions and computer workshops. At the end of each module, delegates take a written exam to gain certification in that module. The entire course takes 6 months to complete and is offered in January and June each year. There are 3 unique ways to take the Wilmott CQF finance; in an actual classroom, through a live webcast, or by using recorded classes.

The course is designed to not only provide a superior level of quantitative finance knowledge but to also educate delegates in C++ programming. The vast majority of professional software development in quant finance is in C++. To be an effective member of a quant team you need to write high-quality code, and you must also be able to understand the C++ written by others.

The CQF Finance designation aims to target a typical participant who will be a market practitioner currently employed in a bank or other financial institution. The course is also suitable for graduate students wishing to enter the financial markets. Some mathematical experience and knowledge of the financial markets is useful before starting the course studies.

The CQF finance designation will be of special interest to those working in derivatives, structuring, fund management, investment banking, financial software, risk management, trading, IT, hedge funds, and banking. Within these industries, the breakdown of where CQF finance graduates is; 20% in risk management, 16% in IT, 11% in trading, 10% in quantitative analysis, 7% in consulting, 7% in derivatives, 7% in hedge funds, 6% in structuring, 5% in fund management, 5% in others, 3% in academia, and 3% in actuary.

The academic discipline breakdown of CQF finance graduates is: 20% in finance, 17% in math, 15% in computer science, 15% in engineering, 9 % in business, 6% in economics, 5% in banking, 4% in physics, 3% in unclassified.

Please stay stuned for our future complete guide to the CQF Program. Please see this link for more information on the CHA Designation -

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CAIA Study Notes | Study Guides and Aidesfor the CAIA Program

CAIA Study Notes

1 Page Guide to CAIA Study Notes & Guides

CAIA Study notes can be utilized in many different ways by candidates. Beyond the CAIA preparation notes recommend by the institute, there are dozens of companies offering similar services. There are also many web posts available of past notes taken by candidates that are offered free of charge. In connection with the vast amount of material a test taker must purchase on his/her own (i.e. text books and articles) there are multiple websites on the web which advertise barter deals to swap books they have already used for ones which they need to study from. There is also a vast amount of material available on Ebay from previous used study guides and CAIA preparation notes, although these might be outdated.

A study guide is provided for both levels of the CAIA exams but additional reading material and CAIA study notes need to be purchased to be successful on either examination. There are also classes available to CAIA exam candidates to further help facilitate their learning. A 70 percent score is required to pass each exam. Level I exam will test very similar to the series 7 exam; it’s memorization driven. Finding the best combination of the vary kinds of CAIA study notes to be successful on the CAIA exam is crucial for CAIA candidates.

The CAIA preparation notes from the CAIA institute have topic outline followed by learning objectives in a chapter format. The Level I Outline is over 100 pages long while the level II outline is over 60. These should be thought of as the bare minimum to pass the exam.

One of the best sources of CAIA study notes comes from fellow test takers. CAIA study notes available from fellow test-takers can provide candidates with more specialized notes concentrated on exam topics which others have found the most challenging.

Some of the examination preparatory programs offering CAIA study notes are institutional Investor exam prep, Uppermark, Kaplan schweser, and Edhec asset management. The CAIA Study notes can vary greatly from company to company. There are hard-copy handbooks that summarize all the Level I learning objectives, from reviewing essential concepts in finance, investment, and statistics, to differentiating between different AI trading strategies and performance measurements. There are also CAIA study notes that are a three book set which is a consolidation of the CAIA assigned readings and includes key concepts, concept checker questions, and two full length practice exams.

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Bernard Madoff Case & Hedge Fund Fraud

Bernard Madoff

Bernard Madoff Case & Hedge Fund Fraud

Bernard Madoff Case & Hedge Fund FraudQuick Link: Bernard Madoff Hedge Fund Investor Letter

News came out last night that Bernard Madoff may have fraudulently lost his clients up to $50B. He is accused of running a Ponzi scheme in what some say is the largest fraud case since Enron.

This is going to encourage government officials to layer on additional regulation of hedge funds across the industry. The loose term "hedge fund" has led to a rapid expansion of the industry over the past 10 years but it also means that when any investment related bad press surfaces someone may have been running what gets referred to as a hedge fund. Here are quotes on the situation from various articles:

Bernard Madoff, accused of orchestrating the largest Ponzi scheme in history, is expected to plead guilty to charges stemming from the alleged $50 billion fraud later this week.

Madoff will appear in Manhattan federal court on Thursday for a “plea proceeding,” according to a filing Friday. Madoff’s attorneys and federal prosecutors have been in talks about a plea bargain since Madoff’s arrest in December; last week, Madoff waived his right to be indicted by a grand jury in a move widely seen as presaging a plea deal. source

The former chairman of the Nasdaq Stock Market is best known as the founder of Bernard L. Madoff Investment Securities LLC, the closely-held market-making firm he launched in 1960. But he also ran a hedge fund that U.S. prosecutors said racked up $50 billion of fraudulent losses.

Madoff told senior employees of his firm on Wednesday that "it's all just one big lie" and that it was "basically, a giant Ponzi scheme," with estimated investor losses of about $50 billion, according to the U.S. Attorney's criminal complaint against him. source
"There is no innocent explanation," Madoff said, according to the criminal complaint. He told the agents that it was all his fault, and that he "paid investors with money that wasn't there," according to the complaint.

The $50 billion allegedly lost would make the hedge fund one of the biggest frauds in history. When former energy trading giant Enron filed for bankruptcy in 2001, one of the largest at the time, it had $63.4 billion in assets.

U.S. prosecutors charged Madoff, 70, with a single count of securities fraud. They said he faces up to 20 years in prison and a fine of up to $5 million.

"Our complaint alleges a stunning fraud -- both in terms of scope and duration," said Scott Friestad, the SEC's deputy enforcer. "We are moving quickly and decisively to stop the scheme and protect the remaining assets for investors."

Dan Horwitz, Madoff's lawyer, told reporters outside a downtown Manhattan courtroom where he was charged, "Bernard Madoff is a longstanding leader in the financial services industry. We will fight to get through this unfortunate set of events."

Earlier this month, the criminal complaint says, Mr. Madoff told one of his sons that "clients had requested approximately $7 billion in redemptions, that he was struggling to obtain the liquidity necessary to meet those obligations." On Tuesday, the complaint alleges, Mr. Madoff added that he wanted to pay bonuses to employees this month, which was earlier than usual.

The next day, the sons met with Mr. Madoff at his office to ask about the bonus situation because he had appeared to be under "great stress" in prior weeks, they told the FBI. Mr. Madoff refused to answer their questions and arranged to meet them at his Manhattan apartment, the complaint says. source
Here is the SEC press release:

Washington, D.C., Dec. 11, 2008 — The Securities and Exchange Commission today charged Bernard L. Madoff and his investment firm, Bernard L. Madoff Investment Securities LLC, with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The SEC is seeking emergency relief for investors, including an asset freeze and the appointment of a receiver for the firm.

The SEC's complaint, filed in federal court in Manhattan, alleges that Madoff yesterday informed two senior employees that his investment advisory business was a fraud. Madoff told these employees that he was "finished," that he had "absolutely nothing," that "it's all just one big lie," and that it was "basically, a giant Ponzi scheme." The senior employees understood him to be saying that he had for years been paying returns to certain investors out of the principal received from other, different investors. Madoff admitted in this conversation that the firm was insolvent and had been for years, and that he estimated the losses from this fraud were at least $50 billion.

"We are alleging a massive fraud — both in terms of scope and duration," said Linda Chatman Thomsen, Director of the SEC's Division of Enforcement. "We are moving quickly and decisively to stop the fraud and protect remaining assets for investors, and we are working closely with the criminal authorities to hold Mr. Madoff accountable."

Andrew M. Calamari, Associate Director of Enforcement in the SEC's New York Regional Office, added, "Our complaint alleges a stunning fraud that appears to be of epic proportions."

According to regulatory filings, the Madoff firm had more than $17 billion in assets under management as of the beginning of 2008. It appears that virtually all assets of the advisory business are missing.

Madoff founded the firm in 1960 and has been a prominent member of the securities industry throughout his career. Madoff served as vice chairman of the NASD, a member of its board of governors, and chairman of its New York region. He was also a member of NASDAQ Stock Market's board of governors and its executive committee and served as chairman of its trading committee.

The complaint charges the defendants with violations of the anti-fraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Advisers Act of 1940. In addition to emergency and interim relief, the SEC seeks a final judgment permanently enjoining the defendants from future violations of the antifraud provisions of the federal securities laws and ordering them to pay financial penalties and disgorgement of ill-gotten gains with prejudgment interest.

The SEC's investigation is continuing.

The SEC acknowledges the assistance of the U.S. Attorney's Office for the Southern District of New York. source

List of Bernard Madoff fraud victims

Tremont Capital. Fund of funds. Lost "hundreds of millions". (announced on CNBC)

Maxam Capital Management LLC. Combined loss of $280 million. "I'm wiped out," said Sandra Manzke, Maxam's founder and chairman. The Darien, Conn., fund of hedge funds will have to close as a result of the losses, she said. (WSJ)

Fairfield Greenwich Group. Bloomberg: The biggest loser may be Walter Noel’s Fairfield Greenwich Group, whose $7.3 billion Fairfield Sentry Ltd. invested with Madoff’s eponymous firm, three people familiar with the matter said... Fairfield Sentry has a record of more than 15 years with an annual return of 4 to 6 percentage points above benchmark interest rates, according to a marketing document dated this month that was prepared by Zurich-based NPB New Private Bank Ltd. On an absolute basis, returns exceeded 10 percent every year from 1991 through 2000. Since then, they ranged from 6.4 percent to 9.8 percent...The strategy is a “split-strike conversion,” where the investment manager buys shares of large U.S. companies and enters into options contracts to limit the risk, the document says.

Fix Asset Management. Bloomberg: Fix Asset Management, which had an account worth at least $400 million with Madoff Investments. The firm said it’s checking with lawyers about the holdings. “We are very shocked,” John Fix, the son of founder Charles Fix, said by phone from Greece. “We put in redemptions in the past few months and got our money back no problem. We are just so surprised about all this.”

Kingate Management Ltd. Bloomberg says $2.8 billion Kingate Global Fund Ltd. invested with Madoff.

Thyssen Family. Source sends the following:

Thybo Investments grew out of a family office for Thyssen. They have been in fund of funds it seems since 1989.

Thybo International is a "proper" fund of fund but it's newer share class G invests only in one manager - and i'm 99% sure it's Madoff as the returns are almost the same. Some more info:

* The fund started in Jan 2007.
* Ernst & Young. Luxembourg are the auditors.
* UBS Luxembourg is the administrator.
* Thybo states on their webpage: "Our track record incorporates audited financial statements at both a composite firm-wide and individual portfolios level."

Ira Roth's family. WSJ: Ira Roth, a New Jersey resident, who says his family has about $1 million invested through Mr. Madoff's firm, is "in a state of panic." He said his 86-year-old mother-in-law has been living on the investments' returns, and he has been using the funds to pay college tuition.

Sterling Equities. Fund controlled by Fred Wilpon, co-owner of the NY Mets, confirms it had money with Madoff.

Stephen Abbott, a San Francisco lawyer. WSJ: [Abbott] and two siblings had several hundred thousand dollars invested with Mr. Madoff. They inherited the trust from their father, who had befriended Mr. Madoff years ago. Performance remained steady through the current bear market, he said. "People were floored," he says. "We were making money in this lousy market." He says he is concerned about recovering the money but "you have to get philosophical about this stuff. It could be worse; we still have our health."

Unnamed European Funds of Funds: WSJ: Christopher Miller, chief executive of London hedge fund ratings agency Allenbridge Hedgeinfo, said: "Some very big investor names are involved in this. The scheme could only work if enough investors were subscribing for him to pay money out. Some of the world's biggest hedge funds have been hit by this. There will be a monumental impact for the hedge fund industry, it could be larger then Enron. "Some investors in Madoff's funds face 100% write-downs on the money they invested, they will suddenly be nursing full write-downs in December. When people realize the magnitude of this it will be fizzing around the stratosphere." One asset manager based in Switzerland, home to many high-net-worth individuals who invest in funds of hedge funds, said: "Everyone's talking about this in Geneva. Several wealthy investors could be facing big losses."

Palm Beach Country Club. Source: CNBC's David Faber

Lawrence Velvel, "69, dean of the Massachusetts School of Law, said he and a friend may have lost millions of dollars between them (AP). "This is a major disaster for a lot of people," Velvel said in a telephone interview from his Andover, Mass., office. "You work all your life, you finally manage to save up something, and somebody who's entrusted with it, it turns out suddenly he's a crook. Lots of people are getting fully or partially wiped out." Velvel said he wants to know where government regulators, as well as accountants and others at Madoff's company, were when the money was being lost." (AP)

Loeb Family. Source: CNBC's David Faber

J. Ezra Merkin. GMAC LLC Chairman. WSJ: Mr. Merkin, the chairman of former General Motors Corp. financing arm GMAC, is also a money manager at Ascot Partners LLC in New York. Ascot, which had $1.8 billion under management as of Sept. 30, had substantially all of its assets invested with Mr. Madoff, according to a letter to Mr. Merkin sent to clients Thursday night. Mr. Merkin said as one of the largest investors in Ascot, he believed he had personally "suffered major losses from this catastrophe."

Norman Braman. Former Philadelphia Eagles owner

Richard Spring. WSJ: A Boca Raton resident and former securities analyst, says he had about $11 million -- or 95% of his net worth -- invested with Mr. Madoff. "That's how much I believed in him," Mr. Spring said.

Members of half-a-dozen country clubs: WSJ: "Mr. Madoff tapped social networks in Dallas, Chicago, Boston and Minneapolis. In Minnesota, he attracted investors from Hillcrest Golf Club of St. Paul and Oak Ridge Country Club in Hopkins, investors say. One of them estimated that investors from the two clubs may have invested more than $100 million combined. One of the largest clusters of Madoff investors was in Florida, where losses could be substantial. Mr. Madoff relied on a network of friends, family and business colleagues to attract investors. According to investors and agents, some of these agents were paid commissions for harvesting investors. Others had separate, lucrative business relationships with Mr. Madoff. "If you were eating lunch at the club or golfing, everyone was always talking about how Madoff was making them all this money," one investor says. "Everyone wanted to sign up." Jeff Fischer, a top divorce attorney in Palm Beach, says many of his clients were also Mr. Madoff's clients. "Every big divorce that came through my office had portfolio positions with Madoff," he says. Two of his investors said that among his clients, Mr. Madoff was considered a money-management legend; they would joke that if Mr. Madoff was a fraud, he'd take down half the world with him."

Bramdean Alternatives in the U.K. 9% of portfolio.

Banque Benedict Hentsch, Geneva-based private bank, $47.5 million.

Nomura and Neue Privat Bank. "Marketed access to Fairfield Sentry Ltd., a fund overseen by Mr. Madoff and sold through Fairfield Greenwich. The shares offered by Neue Privat and Nomura were leveraged three times -- meaning $3 of borrowed money was added to every $1 of capital invested in order to magnify returns, greatly increasing the potential losses for those investors." (WSJ)

Banco Santander. $3 billion EUR worth of exposure via its Optimal hedge fund unit and Banif asset management unit. (MarketWatch)

Unicredit. The Italian firm had unspecified amount with Madoff via its Dublin-based Pioneer alt-asset group. (MarketWatch)

Sen. Frank Lautenberg. Unspecified (Newsday). source

Bloomberg on Madoff:

Walter Noel’s Fairfield Greenwich Group would have collected about $135 million in fees this year for peddling Bernard Madoff’s investing acumen to clients from South America, the Middle East and Asia.

The $7.3 billion Fairfield Sentry Fund invested solely with Madoff, taking a cut of 1 percent of assets and 20 percent of gains, which averaged about 11 percent annually in the past 15 years, according to data compiled by Bloomberg. Tremont Group Holdings Inc. had $3.3 billion in Madoff accounts, according to a person familiar with the matter. They were among at least 15 hedge-fund firms and private banks that earned fees for sending customers’ cash to the 70-year-old money manager.

“It’s mind-boggling that people like Tremont and Fairfield Greenwich had been doing this for so long,” said Brad Alford, who runs Alpha Capital Management LLC in Atlanta, which helps clients choose hedge funds. “It’s the job of these funds of funds to be doing due diligence. That’s why they get paid.”

Madoff was arrested Dec. 11 after he allegedly confessed to running a “giant Ponzi scheme” that may have bilked investors of $50 billion. That fraud escaped the notice of Fairfield Greenwich, Tremont and other funds of funds that had at least $20.3 billion invested with Madoff. Hedge-fund investment adviser Aksia LLC said the managers should have seen “red flags,” such as Madoff’s use of a little-known, three-person auditing firm. source

Think Flat on Madoff:

We are yet to digest the sub-prime horror, international terrorism after Mumbai massacre and suddenly the trans-atlantic media is buzzing about a man and his master weapon- that's right, Mr Madoff & his schemy scheme , "Ponzi". With Wall Street reeling under $50 billion collateral damage, losses pouring in from Europe & parts of asia, some of the brightest investors' money under drain, this scandal has opened up the pandora's box of plight of super-free capitalist market. As the whole story yet to unfold, the big question that comes first- "What went worng? Who is this Madoff? What is this Ponzi scheme? How come big names in the losser list got stumped by this NY man?" Before we jump to any conclusion, let's understand this man and his strategy. source

To read our hedge fund investor letter on the Bernard Madoff hedge fund fraud case please lick here.

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