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7 Jul 2009

Alternative Investment Draft Directive 'Needs Major Surgery' - Paul Myners

Paul Myners, the UK Financial Services Secretary to the Treasury, speaking at an Alternative Investment Management Association (AIMA) event this morning in London, said, “the UK is not in the business of blocking more stringent regulation, contrary to what some in Europe may say.”

Lord Myners said the UK government’s aim was “a framework which allows efficient, well run and well regulated fund managers to compete for business without restriction across the EU and to make the EU a base from which to compete in global markets.” But he said that the draft directive, “needs major surgery before this can be delivered”.

He also expressed concern about the protectionist impact of the directive and argued that, “to deny institutional investors a global choice of fund manager would come at a direct cost to pension savers and others who rely on the returns from institutional investment funds”. He said of the custody elements of the directive that “imposing strict liability for delegated custodians would impose large capital costs, make investing in some emerging markets impractical and increase costs to investors”. And on the leverage caps within the directive, he argued that “systemic risks posed by the leverage of any one fund can only be assessed in the context of wider market conditions so capping leverage on a fund-by-fund basis cannot be an effective protection”, adding that it could even be counter-productive.

Lord Myners said that the UK government was, “reaching out bilaterally to leverage natural alliances and win over others” in Europe. But he pointed out that managers threatening to quit the UK “will make my job harder” and would not be well received in Europe. And he called on institutional investors to make their voices heard on the directive. He said, “if institutional investors can make clear which regulatory safeguards they want to see applied to their fund managers and which they find to be costly and unnecessary, this will send a powerful message to policymakers”.

The UK Financial Services Secretary to the Treasury concluded by arguing that, “an open single market in fund management must be a major opportunity for Europe and we must all do our bit to ensure we deliver the best possible result for EU investors and for the future of the EU funds industry”.

Hedge Fund Fraudster Faces Up To 10 Years

'Hedge fund operator' Rod Stringer has pleaded guilty to money laundering, in a $14 million Ponzi scheme, federal prosecutors say.

He allegedly took money from 44 victims over 8 years, claiming to be "a day trader and hedge fund operator, although he was not a licensed securities broker," the U.S. Attorney's Office said.

According to the Securities and Exchange Commission, Stringer doled out about half the money from the phoney Texas hedge fund to some victims, but kept $6.9 million for himself.

"He solicited and enticed individuals to invest money with him by making false representations and promises, such as: the return on investors' money would be approximately 50% profit; he was a day trader and had a foolproof system; the return on investors' money would be better than a savings account; the accounts were liquid and investors could withdraw their money anytime; and he had several computers that watched the trend line of stocks automatically and advised him when he should move money in and out of the market," a written statement from prosecutors said.

Stringer faces up to 10 years in prison, a $250,000 fine and restitution. The plea agreement calls for Stringer to forfeit more than $1.5 million.

Dubai Hedge Funds, Commodities Investors Required To Move To JLT Free Zone

Registered Members of Dubai Multi Commodities Centre (DMCC), have been asked to join the commodities community at Jumeirah Lakes Towers (JLT). All member companies, including those awaiting membership approvals, will be brought together to form a physical commodities cluster within the 200-acre JLT free zone community.

According to the announcement, DMCC member companies, which until now have been operating from locations across Dubai, will now be required to relocate to the JLT free zone on completion of the first year of operations. The renewal of licences for existing members currently operating outside the free zone will be linked to their relocation to JLT.

Commenting on the new initiative, Sudhakar Tomar, Managing Director, HAKAN AGRO DMCC, a DMCCA member company, said: “We consider this a wise move. Operating from the JLT Zone as a community will streamline commodities trading activity in Dubai. The free zone advantages and the state-of-the-art facilities are sure to provide a competitive edge to companies.”

(DMCC members have access to the Almas Gold and Diamond vaults, market infrastructure and trading platforms like the Dubai Gold and Commodities Exchange, Dubai Diamond Exchange, Dubai Pearl Exchange, Dubai tea Trading Centre and Dubai Cotton Centre, and a range of commodities backed financial investment tools including Shariah compliant hedge funds and Dubai Gold Securities.)

The move is also in response to the impressive rise in the number of registrations at DMCC and JLT, following the progress in the free zone’s development and the increasing interest from investors to set up offices, DMCCA said.

DMCCA is also working closely with the sub-developers of the Jumeirah Lake Towers project to ensure that the towers and office facilities are completed on schedule, which will help companies finalise their relocation strategy.