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20 Sep 2006

Congressman calls for Hedge Fund Study

Mike Castle, a congressman from Delaware and president of the republican main street partnership, introduced a bill last week requiring regulators to study and make recommendations about hedge funds, Castle’s office said Monday. The study should focus on disclosure of information, the congressman said.

Mike Castle serves on the House Financial Services Committee, which has jurisdiction over banking with the securities and insurance industries. Among Castle’s other priorities are immigration reform, stem cell research and deficit reduction.

“Transparency in our financial system is important for market discipline and investor confidence,” Castle said. Castle’s bill comes as a hedge fund based in Greenwich, Conneticut, Amaranth Advisors LLC is reportedly shutting down and returning investors’ money following heavy losses on natural gas investments. In June, a U.S. court overturned an SEC rule requiring hedge fund advisers to register with the agency.

Deutsche Bank to open Japan Hedge Fund

Hedge funds are seeking opportunities in Japan after the recent cut backs in corporate debt has improved the chances of companies increasing dividends and buying back shares.

There are about 220 Japan-focused hedge funds overseeing a total of $35 billion assets, up from 100 funds managing $6 billion of investments in 2002, according to Eurekahedge, a Singapore-based research company.

Ed Rogers, who ran Deutsche Bank AG’s Japan hedge fund brokerage unit until May, is raising $500 million to give U.S. money managers access to some of his former clients in the world’s second-largest economy.

In an ivterview with Bloomberg press, he said, “It’s a great time for this product since Japan is finally emerging from a 14-year economic slump.” Rogers set up Rogers Investment Advisors this year in Tokyo and is advising Wolver Hill Asset Management Ltd., a New York-based company, to raise $500 million within a year, mostly from U.S. investors. Rogers also said Wolver Hill also plans to start an Asia-focused fund of funds that may raise another $500 million by February, he said.

Wolver Hill Japan Multi-strategy Fund will be the first fund of hedge funds located in Japan that’s open to investors in the U.S., Rogers said. The Wolver Hill fund will invest in 10 to 20 local hedge funds.

The fund will put half of its assets into equities, including short positions in which investors sell borrowed stock in the anticipation they can buy it back at a lower price. The rest will be committed to strategies that profit from price differences of related corporate securities, or so-called arbitrage funds.

Hedge funds in Japan have faced more difficult conditions this year. The Eurekahedge Japan Hedge Fund Index, which tracks 123 funds, fell 4.18 percent in the eight months through August, preliminary data show. The Eurekahedge Asian Hedge Fund Index is up 5.35 percent. The Nikkei 225 Stock Average, which gained 41.5 percent in 2005, has slipped 1.5 percent this year.

Hedge Fund suspect in Stock Manipulation Investigation

Hedge fund Aeneas, and it’s founder Thomas Grossman, are under scrutiny in Malaysia as the Securities Commission is probing allegations of stock manipulation.

The $400 million hedge fund firm specializes in long-short emerging markets strategies. The “investigations relating to the manipulation of certain shares are ongoing and individuals acquainted with the facts of the cases have been called in to assist,” a Securities Commission spokeswoman told Dow Jones Newswires.

Hedge fund Aeneas Capital Management L.P. suffered big losses that reportedly followed investments in Malaysian shares such as smart card maker Iris Corp., poultry producer Farm’s Best Bhd., and Internet related systems provider Mobif Bhd. According to Bursa filings from early 2006, Aeneas bought and sold substantial amounts of shares in these companies.

The official, speaking on condition of anonymity, declined to say if the commission is working with the U.S. Securities and Exchange Commission in its probe.