Multimillionaire hedge fund co-founder, Paul Marshall, defended his hedge fund Marshal Wace and its controversial strategy, which relies on investment ideas supplied by City stockbrokers, he said in an interview with the Times.
Marshal doesn't believe that his system, called Tops, would encourage market abuse. The hedge fund, which manages only about $11 bn but it is thought to trade a greater volume of European equities than any other fund, is reputed to pay out £250 million in commission each year to equity salesmen to ensure that it is in the best position to make the most of a good investment opportunity.
Mr Marshall said: “Our audit trail and compliance procedures act as a very strong deterrent to anyone who even considers entering unauthorised information into the Tops system.” Tops was the attraction of MW Tops, a listed hedge fund that Marshall Wace floated last month in Amsterdam.
The Tops methodology goes to the heart of the firm’s success. It has also raised the eyebrows of regulators, although the Financial Services Authority recently gave the practice a cautious nod of approval, despite fears that the system might encourage people in investment banks to pass on recommendations based on inside information.
17 Jan 2007
Hegde Fund Offers to Buy Out Near-Bankrupt Company
The hedge fund Farallon Capital Management, which owns 11% of shares in The Mills Corp., proposed pumping $499 million into the mall developer to help ease the company's heavy debt and avoid putting it up for sale at a depressed price.
The hedge fund said in a Securities and Exchange Commission filing that the recapitalization would buy Mills time to "move from a triage mode into a recovery mode." Farallon said Mills requested the proposal.
The hedge fund offered to buy Mills shares at $20 and set a Friday deadline for the two sides to agree on the proposal. The extra money would give Mills a cash infusion to cover some of its debt, which Mills warned last week could drive it into bankruptcy.
Hegde fund Farallon also said it could keep Mills from having to sell itself out of desperation to cover its debts. "Any sale today would almost certainly be at a discount in order to compensate the buyer for abnormal conditions," Farallon wrote in a letter accompanying the SEC filing.
Those abnormal conditions include widespread accounting problems that have forced Mills to delay several SEC filings and restate earnings dating to 2001. Mills said last week that an internal review uncovered extensive accounting errors, some the result of possible wrongdoing by company officials.
The company also warned that it is struggling to repay the $1 billion remaining on a loan it took out from Goldman Sachs Mortgage Co. last year to help it stay afloat. That loan is due at the end of March.
The hedge fund said in a Securities and Exchange Commission filing that the recapitalization would buy Mills time to "move from a triage mode into a recovery mode." Farallon said Mills requested the proposal.
The hedge fund offered to buy Mills shares at $20 and set a Friday deadline for the two sides to agree on the proposal. The extra money would give Mills a cash infusion to cover some of its debt, which Mills warned last week could drive it into bankruptcy.
Hegde fund Farallon also said it could keep Mills from having to sell itself out of desperation to cover its debts. "Any sale today would almost certainly be at a discount in order to compensate the buyer for abnormal conditions," Farallon wrote in a letter accompanying the SEC filing.
Those abnormal conditions include widespread accounting problems that have forced Mills to delay several SEC filings and restate earnings dating to 2001. Mills said last week that an internal review uncovered extensive accounting errors, some the result of possible wrongdoing by company officials.
The company also warned that it is struggling to repay the $1 billion remaining on a loan it took out from Goldman Sachs Mortgage Co. last year to help it stay afloat. That loan is due at the end of March.
Subscribe to:
Posts (Atom)