SEC Settles Against Zurich With A $4 Million Penalty

The Securities and Exchange Commission announced a settled administrative proceeding against Zurich Capital Markets Inc. for its role in providing financing to hedge fund clients that engaged in market timing of mutual funds and facilitating the hedge funds' deceptive trading tactics.

The Commission ordered ZCM, a New York-based subsidiary of Zurich Financial Services, to pay $16.8 million consisting of $12.8 million in disgorgement and prejudgment interest and a $4 million penalty. The money will be distributed to the mutual funds that were harmed as a result of market timing ZCM facilitated.

Mark K. Schonfeld, Director of the New York Regional Office, said, "By knowingly financing their hedge funds clients' deceptive market timing, ZCM reaped substantial fees at the expense of long-term mutual fund shareholders. Because of ZCM's attractive financing arrangement and its willingness to create a number of anonymous special purpose vehicles ( SPVs ) for its hedge fund clients, the hedge funds were able to inflate their trading profits from their deceptive conduct."

Helene Glotzer, Associate Director of the New York Regional Office, added, "This action demonstrates that the Commission continues to carefully examine the role of financial intermediaries that assist hedge funds engaged in deceptive practices."

The Commission's Order found that ZCM aided and abetted four hedge funds that were carrying out schemes to defraud mutual funds that prohibited market timing. ZCM's hedge fund clients knew that many of these mutual funds prohibited market timing. In an effort to avoid being detected and potentially blocked from making market-timing trades in these funds, each of these hedge funds and ZCM disguised their identities

ZCM, which is currently winding down its operations, consented to the entry of the Commission's Order without admitting or denying the Commission's findings. In determining to accept the settlement, the Commission considered ZCM's cooperation in this investigation.

Fortress Acquires East Coast Industries For $3.5 Billion

Hedge fund investor Fortress Investment Group LLC has acquired Florida East Coast Industries, Inc. (FECI) for approximately $3.5 billion, according to a press release. The merger agreement was unanimously approved by FECI's Board of Directors. Upon completion of the transaction, FECI will become a privately held company, and its common stock will no longer be publicly traded.

Florida East Coast Industries will pay a special dividend of $21.50 per share in cash and in the merger shareholders will receive $62.50 in cash for each share of FECI common stock they hold. The combined dividend and merger consideration equal $84.00 per share and represent a 13.3% premium to the NYSE closing price of $74.13 on May 7, 2007 and a 31% premium to the average closing price over the last 60 trading days.

Adolfo Henriques, Chairman, President and Chief Executive Officer of FECI, stated, "Our focus has always been about maximizing shareholder value. The value created by this transaction is a direct result of our employees' dedication, commitment and hard work over many years. We look forward to working together with Fortress to continue to build our businesses."

Morgan Stanley acted as financial advisor to FECI and provided an opinion to the Board of Directors of Florida East Coast Industries that the merger consideration is fair to FECI shareholders from a financial point of view. Additional information will be filed with the SEC.

Florida East Coast Industries, Inc., owns, develops, leases and holds in joint ventures, approximately 8.6 million square feet of Class-A office and industrial space primarily in Jacksonville, Orlando and South Florida counties of Palm Beach, Broward and Miami-Dade, as well as an additional 1,916,000 square feet under construction.

Fortress Investment Group LLC is a leading global alternative asset manager with approximately $35.1 billion in assets. Fortress manages private equity funds, hedge funds and publicly traded alternative investment vehicles. The private equity funds total approximately $19.9 billion of the firm's assets under management.

Canadian Hedge Fund Launch

Goodman & Company Investment Counsel Ltd. announced the launch of the Dynamic Global Value Balanced Fund, a balanced fund offering global diversification.

The fund highlights active hedging as risk management, minimizing sensitivity to interest rate and credit spread changes and foreign currency exposure, tactical asset allocation, and diversification.

"With this fund, investors can participate as stock markets rise while bonds help to safeguard their portfolio against stock market downturns," said David Fingold. "What's most unique about this fund is the complete flexibility we have to go wherever there is value on both the equity and the fixed income side. We are not constrained by any index and we have all the tools we need to control risk."

Two award-winning hedge fund managers have joined forces to build and manage the Dynamic Global Value Balanced Fund portfolio. Goodman & Company's global equity specialist David Fingold will manage the fund's value-style equities, and Barry Allan, founder of Marret Asset Management Inc., will manage the high-yield bond portion of the portfolio.

David Fingold is also the lead portfolio manager of Dynamic American Value Fund and two other global value funds, including Dynamic Global Discovery Fund, which won Global Equity Fund of the Year at the first annual Lipper Fund Awards 2007 Canada.

Barry Allan is also the lead portfolio manager of Dynamic High Yield Bond Fund, which won High-Yield Bond Fund of the Year at the 2005 Canadian Investment Awards. He also co-manages two other Dynamic value funds, including Dynamic Value Balanced Fund, which was named Canadian Balanced Fund of the Year at the Lipper Fund Awards 2007 Canada.

Goodman & Company has more than $24 billion in assets under management and offers wealth management solutions to mutual funds, hedge funds and high net-worth investment counsel.

Blackstone To Launch 2 Funds Of Hedge Funds

Blackstone Group LP is looking to raise up to $2 billion for two new funds of hedge funds, according to recent reports, the Blackstone Strategic Alliance Fund LP and the Blackstone Strategic Alliance Offshore Fund Ltd.

Blackstone said in April filings with the Securities and Exchange Commission that the new funds may gather as much as $1 billion each. Commenting on developments, Paul Shaye of Chestnutt Hill Partners told Bloomberg: "It's another arrow in their quiver and shows again that Blackstone is no longer just a private-equity firm. It's really looking like a firm that is going to compete with the likes of the big brokerages.''

Blackstone's hedge fund unit currently manage $17.1 billion, which constitutes 22% of the firm's total assets under management. News of the company's intentions signals its intent to increase the scope of its money management interests having initially started out specializing in buyouts. Earlier this week Blackstone announced it has acquired plastics company Klockner Pentaplast from fellow private equity firm Cinven for $1.8 billion.

Since 1985, Blackstone has raised capital of approximately $59.4 billion for discretionary private equity investment funds focused on alternative asset classes. In addition Blackstone manages approximately $17.1 billion in discretionary marketable alternative asset programs, $2.5 billion in proprietary hedge funds and approximately $2 billion in closed-end mutual funds. The Corporate Advisory Services and Restructuring & Reorganization Advisory Services businesses have handled assignments valued at over $550 billion.

Through December 31, 2006, Blackstone had invested or committed to invest total capital of $37.5 billion in 371 transactions with a total enterprise value of over $339 billion through its Private Equity, Real Estate, and Mezzanine funds and over $6.1 billion across 467 different senior loan and other debt instruments through its Corporate Debt funds.

Integra Hedge Fund Launch

Integra Investment Management announced the launch of their new hedge fund, the Integra FX2 Master Fund L.P., with $10 million of their own money at launch, the new hedge fund opened its doors April first, 2007.

The new fund was created to compliment Integra's established flagship fund, Integra Master Fund L.P. and to fulfill investor requests for an FX only product. The new fund will trade the same methodology as the flagship fund with the exception that it will be trading the OTC FX markets only with double the exposure of the flagship fund. Views will be expressed using options while adjusting the exposure levels via trading the underlying spot markets.

With UBS as prime broker, the hedge fund has a $500K minimum investment, 2% management fee and 20% performance fee. The Integra FX2 Master Fund will target the major currency pairs already traded in the flagship fund as well as a limited number of additional currency pairs. Richard Scalone, founder of Integra will act as portfolio manager for the new hedge fund.

Prior to his tenure at Integra, Scalone was at ABN Amro Bank where he worked as a proprietary trader in futures, bonds and the forward and spot markets from 1997 to 1998. From 1988 to 1997, Scalone traded foreign exchange for Chemical Bank (now JP Morgan Chase), serving as a forward currency trader, chief dealer for the European Monetary System (“EMS”) desk and as a forward desk manager for all EMS currencies.

Integra was formed in 1999, with $645 million in assets under management, Integra manages FX hedge fund and other option based FX trading strategies with minimal exposure to US Fixed Income.

Integra's Flagship Fund, the Integra Master Fund L.P. trades approximately 85% OTC FX in the major currency pairs and approximately 15% in the fixed income markets and the S&P via the futures markets.

RBC Hedge Fund Index Up for March

RBC Capital Markets reported that for the month of March 2007 the RBC Hedge 250 Index had a net return of 0.87%. This brings the year-to-date return of the Index to 2.86%. These returns are estimated and will be finalized by the middle of next month. The return for February 2007 has been finalized at 0.77%.

The RBC Hedge 250 Index is an investable benchmark of the performance of the hedge fund industry. Comprised of more than 250 actual hedge funds, the RBC Hedge 250 Index is positioned as the industry’s most diversified and representative investable index.

The Universe on which the Index is based currently consists of 5,692 hedge funds (excluding funds of hedge funds) with aggregate assets under management of $1.319 trillion.

Since its inception on July 1, 2005 through the end of February 2007, the RBC Hedge 250 Index has had an annualized net return of 11.29%. In comparison, over the same period, other investable indices have averaged 7.96% while non-investable indices have averaged 12.97%, according to information reported by the sponsors of those indices.

BNP Buys Into Canadian Hedge Fund Subsidiary

BNP Paribas and the National Bank of Canada announced in a press release today that BNP Paribas has acquired a stake in Innocap Investment Management Inc., a subsidiary of National Bank of Canada, which specializes in hedge fund managed accounts.

They have formed a joint venture offering hedge fund managed accounts, a vehicle of choice for retail and institutional investors who wish to invest in hedge funds while controlling operational and market risks. National Bank of Canada and BNP Paribas intend to make Innocap the leading provider of managed accounts for investors worldwide.

Innocap, which advises on over $2 billion in hedge fund assets, provides active daily monitoring of alternative funds with complete transparency on the underlying positions and on the setting of adequate risk limits and investment guidelines. Additionally, it monitors operational risk, and advises on, along with third party service providers, all the key operations for the hedge funds.

“I'm delighted by the creation of this partnership,” said Yann Gerardin, Global Head of BNP Paribas Equities and Derivatives. “Innocap offers a powerful platform with full-fledged high-tech risk monitoring, control, liquidity and transparency to investors. These capabilities will enable us to create a new generation of structured products, which we expect will have broad appeal to an international client base.”

This joint venture will allow BNP Paribas, recently awarded “Equity Derivatives House of the Year” by Risk Magazine, to strengthen its capabilities in structuring fund derivatives products, while completing its global alternative fund offering.

Martin Gagnon and Denis Parisien, co-CEOs of Innocap added: “BNP Paribas and National Bank of Canada are complementary, well-established institutions sharing the same business vision and ambition. We are confident in this joint venture and look forward to its success.”

Innocap is the end result of 11 years of investments in hedge fund strategies for the National Bank of Canada.

Survey Of Affluent Americans Shows US Investors Looking Overseas

The U.S. Trust Survey Of Affluent Americans polled the top tier of wealthiest Americans about their economic outlook, investment behavior, wealth management, philanthropy and intergenerational wealth issues.

A majority of the wealthy people surveyed believe hedge funds are good vehicles to provide strong returns and hedge market risks. Still, about three-quarters of this group say a good hedge fund is difficult to find and just as difficult to investigate.

However, those surveyed believe that the U.S. stock market is becoming riskier, and many are shifting to international equities. Many wealthy people expect to get bigger gains overseas than they do here in the U.S., with an expected average annual return of 9.66% in international equities versus 8.85% in the U.S. markets.

The Survey Of Affluent Americans constitutes of Americans with an investable net worth greater than $5 million, not including primary residence. In addition, included in this study is a special sub-sample of ultra high net worth Americans with total assets of $25 million or more.

In the report, the U.S. Trust says 74% of wealthy people believe that the budget deficit will affect the economy over the long term. This, they believe, will spill into the international arena as well, and leads them to worry about the U.S.'s role in international finance. With recent market events in China setting off a global ripple, as well as dollar lows, there is certainly ample precedent for their concerns.

And the survey indicates that these concerns aren't limited to the near term. Most wealthy people say that the next generation will have a more difficult time financially. Seventy-two percent of respondents worry that environmental issues will require more government spending and that taxes will rise significantly over the next few years. As well, they believe high taxes will reduce the value of their estates.

Fauchier Partners Launches Special Situations Fund Of Hedge Funds

Fauchier Partners announced the launch of the Jubilee Special Situations Fund (JSSF), which will provide investors with returns more commonly associated with longer term and less liquid investments. JSSF was launched on 1 April with approximately $50 million committed. It will initially be open for investment until June 2007.

The fund of hedge funds has been designed as a vehicle for investors who are able to commit funds for longer periods of time and has a target return of LIBOR + 8%. The London Interbank Offered Rate Index (LIBOR) is an average of the interest rates that major international banks charge each other to borrow US dollars in the London money market. Like the US treasury the CD indexes, LIBOR tends to move and adjust quite rapidly to changes in interest rates.

Its portfolio consists of hedge funds investing in the debt and equity of private and publicly-listed companies, with a focus on distressed debt, direct lending and structured public and private equity. The balance will be invested in more traditional value-based investments.

Fauchier Partners, founded in 1994, is a specialist London-based firm, which manages a variety of funds of hedge funds and also advises a number of listed closed-end funds of hedge fund vehicles. It has the equivalent of approximately $4.7 billion under management.

$99 Billion Company Hires Hedge Fund Manager

Nikko Asset Management Co., Ltd. announced the appointment of hedge fund manager, Thomas Juterbock, as Senior Portfolio Manager at Nikko Alternative Asset Management Inc., a New York-based subsidiary of Nikko AM Tokyo.

Juterbock said, "I am thrilled to join the Nikko AM team. With the line between 'traditional' and 'alternative' investment blurring and with the shifting demographics of investment flows, international asset management is at a very interesting crossroads. I see Nikko AM as uniquely positioned to capitalize upon these trends and I look forward to working with the Nikko AM team to help realize the full potential of this new opportunity set."

Juterbock will be a member of Nikko AM's Global Investment Committee and will report to Masayuki Ishihara, Global Head of Fixed Income. Prior to joining Nikko AM, Juterbock acted as founder, principal owner, CEO and CIO of Fairstream Capital hedge fund management group. Juterbock has over 20 years of experience in trading and risk management at Morgan Stanley, where he was a Managing Director from January 1990 to May 2005.

At Nikko AM, Juterbock and his Fairstream team of six will seek ways to employ Fairstream's global macro investment process to the broader array of Nikko AM products, while helping to expand Nikko AM's product offerings worldwide.

Nikko AM is a leading asset management group headquartered in Japan. Established over 45 years ago, the company has $99.1 billion in assets under management, its investment trusts are distributed through a network of approximately 200 partner securities companies and banks. Nikko AM employs over 550 people in Tokyo, New York, London and Singapore.

100 Women in Hedge Funds Awards

100 Women in Hedge Funds is today presenting their 5th Anniversary event, Raising Capital: Keys to success and new trends in the industry, in Stamford, CT. The event is hosted by UBS Investment Bank and All Bar None.

The speaker, Bill Brown, UBS Head and Chief Investment Officer, will discuss the role of raising capital for hedge funds and the challenges in the current environment. The invited speakers have experience in successfully raising capital for hedge funds and knowledge of the market.

100 Women in Hedge Funds offers events in numerous cities across the globe. On May 2 they are hosting an Inaugural Networking Event in Geneva and also coming up is the inaugural 100 Women in Hedge Funds London Gala, which will be held June 13, 2007 at the Royal Courts of Justice, London for benefit of The Prince's Trust.

Hedge fund managers Gay Huey Evans of Tribeca Global Management, and Michael Hintze of CQS, will be honored the Gala.Huey Evans will receive the 100 Women in Hedge Funds' European Industry Leadership award. Huey Evans is President of Tribeca Global Management (Europe), Citi's Alternative Investment's hedge fund platform. She has helped build out Tribeca into a premier multi-strategy hedge fund platform within Citigroup.

Hintze, who is Founder and Chief Executive Officer of CQS, will receive the 100 Women in Hedge Funds' European Effecting Change award for his philanthropic activity. Hintze established CQS in 1999 and the firm, one of the largest hedge funds in Europe, now manages over US$6 billion. Over the last several years, the Hintze Family Charitable Foundation has made awards to educational and health programs, and the Arts, including The Prince's Trust, The Prince's Foundation, Trinity Hospice, The Evelina Children's Trust, the Victoria and Albert Museum's Sculpture Galleries, the Vatican Museums' Pauline Chapel and the University of Sydney.

Sal. Oppenheim To Launch Spin-Off Hedge Fund

Sal. Oppenheim Jr. & Cie, one of Europe's largest private banks is moving towards alternative investments and hedge funds. Oppenheim said it wants to spin off a hedge fund from its proprietary trading book. The bank will seed the hedge fund with its own cash but expects to raise as much as €500 million ($680 million).

Oppenheim already has launched the Figaro Currency Fund, a Dublin domiciled hedge fund, as another example of success. It combines the bank's currency expertise with a modern absolute-return approach. The fund aims to achieve stable above-average returns (7% - 10% p.a.) with low correlation to stocks and bonds. The Investment process of the hedge fund is a disciplined analytical approach combining macro-economic analysis, geopolitical trends, technical indicators and general market sentiment towards investing in currencies.

Headquartered in the bank's offices in Zurich, the new hedge fund will will begin trading in the third quarter, taking long and short positions in small to mid size companies, investing almost two-thirds of the book in firms from German-speaking countries, it said. The rest will be invested primarily in other Western European countries.

Oppenheim today is one of Europe‘s leading private banks. Since the company‘s founding in 1789, the Cologne private bankers have been open to new developments in industry, business, and new financial models.

Dresdner Kleinwort Announces New Head for US based Hedge Funds

Dresdner Kleinwort, the investment banking division of Dresdner Bank AG announced the appointment of Chris Baildon as Head of Equities Distribution for US based Hedge Funds. Baildon joins as a Managing Director and will report to Mark Small, Head of Equities in the US and Martin Newson, Head of the Hedge Fund Solutions Group based in London.

Baildon previously worked at UBS where he specialized in the coverage of hedge funds as Head of European Sales Trading. Martin Newson, Head of Hedge Fund Solutions said, "Chris is an important addition to our team and the ongoing development of our of hedge fund offering. The European markets are extremely significant to US based hedge fund clients, perhaps now more than ever, and the appointment of Chris further improves our ability to offer the funds the very best levels of servicing."

According to reports, Dresdner Kleinwort plans to double the number of hedge fund specialists in its investment bank over the next three years, aiming to increase hedge fund sales from 10-15% of fees and commissions to 25%.

The bank currently employs close to 50 staff focused on hedge funds across its corporate finance, equities, fixed income, currencies and derivatives divisions, and plans to double this to 100. Newson, hired last November to set up the bank’s hedge fund solutions group, said the new appointments would be spread over three years.

Hedge Fund Ritchie Capital To Sell Flagship Fund

Hedge Fund Ritchie Capital Management, as part of a liquidation plan, is selling a significant portion of its assets in its Multi-Strategy Fund for $1 billion to New York City-based Reservoir Capital Group.

Ritchie Capital, which oversees about $2.8 billion including borrowed money, will liquidate its Multistrategy Global Fund and return cash to investors. The company told investors that the Ritchie Capital Management flagship multi-strategy hedge fund had about $730 million in assets in mid-2006.

Thane Ritchie, founder of Ritchie Capital said in a statement, "We are pleased that investors have approved this transaction as it is a significant first step in meeting our stated objectives for the Multi-Strategy Fund - preserving the value of its assets and returning capital to redeeming investors,.....However, we recognize that we need to continue to work diligently and intelligently to completely fulfill our commitment to all our investors."

After facing an extended period of under performance and investor demands for capital returns, the hedge fund has been in exclusive talks with Reservoir and Coller for several months to buy the flagship fund, sources have said. The sale is the first of what Ritchie Capital Management expects will be a series of transactions for the remainder of the fund’s assets. At the end of 2004, Ritchie lost more than 2% of its flagship fund and decided to alter it to a traditional, more liquid one to one that incorporates private equity and longer-term investments.

The deal with Reservoir has been approved by Ritchie investors launching a new fund called Rhone Holdings, L.P., which will purchase the assets in part with capital invested by Reservoir funds. Ritchie will manage this new entity, the firm explained in a statement.

Reservoir Capital is a private investment firm with about $3 billion under management. Ritchie Capital Management is headquartered in Geneva, Illinois with offices in New York, Chicago, London, Bermuda, Hong Kong, and Menlo Park, California.

VanthagePoint Joins With G Squared to Launch Fund Of Funds

G Squared Group Asset Management has teamed up with hedge fund services provider VanthedgePoint Group LL by purchasing a 10% minority stake and is launching a fund of hedge fund comprised solely of its emerging manager clients.

“By partnering with VanthedgePoint our idea is to greatly reduce the number one risk regarding investments in emerging managers: operational risk,” said Gualtiero Giori, managing partner of G Squared. The new vehicle, White Hill Fund, will invest exclusively in early-stage emerging hedge fund clients of VanthedgePoint Securities, the broker/dealer arm of VanthedgePoint Group. The fund will commence operations on May 1.

VanthedgePoint serves as a prime broker dealer, providing stock trading clearance and loans to small to midsize long/short equity hedge funds, with assets of over $1 billion, launching a fund of emerging hedge funds makes sense because larger pension funds typically have restrictions on investing more than 10% of their capital in any one fund.

"This allows us to offer our clients not only the potential outperformance typically demonstrated by emerging managers, but also a structure whereby they can track new talent while avoiding concentration risk and minimizing non-investment due-diligence work." said Giori.

New Jersey To Invest in Hedge Funds of Funds

According to a due diligence memorandum presented to the New Jersey State Investment Council by director William Clark, NJ has a proposed $100 million investment in each of two Blackstone funds of funds strategies, Pacific Opportunities Strategy and an Emerging Markets Strategy to handle new hedge fund and private equity allocations.

The NJ pension system is also aiming at allocating a total of $625 million to two funds of hedge funds and three single-strategy managers, and a total of $325 million to four private equity funds, according to a due diligence memo penned by director William Clark to the system’s investment council.

Also in the investment proposal, NJ is looking to make a $150 million commitment to a fund of funds to be managed by Protégé Partners, the New York-based firm currently manages $2.2 billion and invests in smaller, niche funds and also seeds managers. The pension system is also allocating $150 million to Farallon Capital Institutional Partners, a multi-strategy fund, and $50 million to Omega Overseas Partners Ltd Class B, a long/short equity fund.

New Jersey’s proposed direct investments in single-strategy managers include a $75 million commitment to the Ascend Partners Fund II, which is a 1.5x levered version of the firm’s fundamental equity long/short strategy.

In private equity, NJ is making a $100 million commitment to Avenue Special Situations Fund V and a $50 million commitment to KPS Special Situations Fund III. Both funds focus on U.S. stressed and distressed opportunities. Finally, a $100 million commitment is being made to MatlinPatterson Global Opportunities Partners, a global distressed fund, and a $75 million commitment to Thomas H. Lee Equity Partners VI, a growth-oriented buyout fund.

Hedge Funds & The Uranium "Arms Race"

Corrected on the 26th of April

Several hedge funds have been buying largely into the processed uranium market, causing most of the new demand for uranium and helping drive up the price more than fourfold within the past year.

Some hedge funds that have been reported as buyers are Adit Capital, who according to reports, bought up millions of pounds for as little as $20 per pound. Citadel Investment Group assumed control of 2.3 millions pounds through its stake in an IPO, and GLG Partners and Fortress Investment Group have set up teams to begin trading uranium.

There is no futures market for uranium and a declining supply of the product, coupled with an increase of outside investors, such as hedge funds, has led the Nuclear Energy Institute to suggest allowing only end users of uranium to purchase it. It is mined by only by a few companies such as Canada's Cameco Corp.

Uranium Participation Corporation is a closed end mutual fund that buys and holds uranium, making it one of the only ways for an average investor to buy directly into uranium. Its documents can be found on SEDAR and regarding transparency, the fund publishes its NAV every month on its website, disclosing what it has paid for uranium. It is exchange traded on the Toronto Stock Exchange by the symbol is U. There are also warrents on U for those who are inclined to more aggressive positioning.

A newly created uranium futures contract will begin trading on the Nymex electronic system on May 7, according to their VP of marketing Randy Warsager. Most of the Nymex products are traded on the Chicago Mercantile Exchange Globex system under a joint agreement between the two markets.

The Wall Street Journal has called hedge funds' involvement in the market “a new type of nuclear-arms race.” Hedge fund and other investors hold around 20 mm lbs of uranium equivalent, according to David Hard of NukemInc.com, that's about 20% of one year's mine production.

UK Treasury Examing Pooling EU Hedge Fund Information

Speaking at a Financial Services Authority conference, UK Treasury minister Edward Balls said he planned to seek the views of other European countries about pooling information and working together on European international regulatory issues concerning hedge funds.

This could signal that the British government is again taking a closer look at hedge fund regulation। He said in his speech, "The first thing to stress is the consensus over the positive role that hedge funds play - providing liquidity, helping markets price assets more accurately and driving financial innovation."

But, "authorities should be vigilant regarding any of the potential risks posed by hedge funds. As the location for around 90% of the EU's hedge fund management business, the UK - and in particular the FSA - has thought hard about getting the regulatory approach to hedge funds right."

Balls said a six-monthly survey of banks' exposures to hedge funds through derivatives, secured financing and prime brokerage, could be enhanced if other regulators shared information about their own banks' exposures to the hedge fund industry. "Following discussion with the FSA, we believe that the quality of prudential supervision of hedge fund activity would be enhanced if there were greater co-operation between the key regulators," he said.

The Treasury minister said he recognized that some experts feared hedge funds were taking increasing risks to generate high returns, but he rejected a more heavy-handed approach to regulation. He also confirmed that the government is looking at issuing shariah-compliant debt, in a move to position London as a global center for Islamic finance and build bridges with the Muslim community.

$1.1 Billion Hedge Fund Deal Goes to Northern Trust

Chicago based Northern Trust has been selected to provide fund administration services to the 816 million Euro (approximately $1.1 billion) hedge fund, BH Macro Limited.

The BH Macro Limited fund, based on the British isle of Guernsey, is one of the first single strategy hedge funds to obtain a secondary listing on the London Stock Exchange under the recently revised listing rules in Chapter 14 of the Financial Services Authority regulations. The single strategy hedge fund will invest in the Brevan Howard Master Fund, a $12 billion hedge fund with a predominant exposure to global fixed income and foreign exchange markets.

Sue Baines of Northern Trust said "We have a long history of servicing more traditional, closed-ended funds with listings in a variety of locations, in addition to being a leading administrator of alternative assets. This combination of expertise has allowed us to support many asset managers taking advantage of the increasing flexibility to list a range of alternative funds, in a variety of domiciles, whether these are private equity vehicles on Euronext, or hedge funds and funds of hedge funds in London. We are delighted to be working with Brevan Howard and look forward to continuing to grow our hedge fund and fund of funds client base."

With $3.8 trillion in assets under management, Northern Trust Corporation is a provider of investment management, asset and fund administration, fiduciary and banking solutions for corporations, institutions and affluent individuals worldwide.

Hedge Fund ''Landmine'' Conference

Thompson Hine LLP, a leading national business law firm, will present a seminar to help hedge fund organizers, managers and advisors identify and avoid common pitfalls. “Fiduciary Landmines in Organizing and Operating Hedge Funds” is a free seminar open to hedge fund industry professionals and will be held at the Palmer House Hilton in Chicago on May 17 from noon to 4:15 p.m. CDT.

Hedge Fund Innovator Joel Press of Morgan Stanley Will Deliver Keynote: “Emerging Trends in a Newly Scrutinized Industry”

The seminar focuses on how to identify and resolve fiduciary issues in structuring and operating hedge funds. The program is structured to provide valuable insight into the obligations of alternative asset managers. It is geared to hedge fund managers, compliance professionals and vendors who provide services to the hedge fund industry.

In addition to Joel Press of Morgan Stanley, other speakers and panelists will include Howard Altman, Co-Managing Principal at Rothstein Kass, a leading accounting firm for hedge funds; Scott Richter, Managing Director and Associate General Counsel, JPMorgan; Sam Weiser, former Managing Director, Citigroup; Douglas Squassoni, Vice President and Senior Counsel, Mellon Bank; Aaron Vermut, Chief Operating Officer, Merlin Securities; and Thomas Feher, Partner, Thompson Hine.

“The hedge fund industry is at a crossroads, and confusion about the potential for increased oversight is making it an ongoing challenge for the industry to anticipate emerging issues,” said Richard Heller, a partner in the investment management practice at Thompson Hine in New York, who is organizing the conference. “This seminar will help put things into perspective for current hedge fund managers, as well as those considering establishing alternative investment funds. Fiduciary landmines abound. Knowing where and how to deal with them is key.”

Conference topics include:
* “Issues of Interest to Alternative Asset Fund Managers”
* Luncheon Keynote: “Emerging Trends in a Newly Scrutinized Industry”
* “Issues to Consider When Structuring a Hedge Fund and Soliciting Investors”
* “Fiduciary Aspects of Running a Hedge Fund”

While hedge funds are no longer required to register with the SEC, the rules that govern how brokers use their “soft dollar” commissions are designed to prevent abuses, such as payment for meals, rent, travel and other expenses not directly attributable to investment decisions. Additionally, the SEC is reviewing a change to the accredited investor rule which may have implications for the hedge fund industry.

The seminar is free and open to hedge fund industry professionals. Registry online by May 7.

Thompson Hine’s May 17 hedge fund landmine seminar will be followed at 5:30 p.m. by The Fifth Annual “Open Your Heart to Children” benefit held by the Chicago chapter of Hedge Funds Care at the Millennium Park Rooftop Terrace.

Court Of Baltimore Rules Against Costa Brava Hedge Fund

The Circuit Court for Baltimore City has, for the third time in just over a year, denied legal motions filed against Telos Corporation by Costa Brava Partnership III, L.P., a Boston-based hedge fund. Costa Brava previously had two motions for receivership dismissed or denied, and a motion for preliminary injunction regarding the sale of assets dismissed.

John B. Wood, CEO of Telos said, “As we said in our memorandum to the court, Costa Brava clearly refuses to take no for an answer. Not satisfied that their stock value has increased by nearly 200% in less than two years, Costa Brava wants to litigate even higher returns, an act that could have detrimental effects on our other shareholders and our employees.”

The activist hedge fund was demanding that Telos be prohibited from pursuing or closing any sale of assets until after May 31, 2007. That is the date that Costa Brava hopes to elect two new Class D directors of their choosing to the Telos Board of Directors.

Costa Brava and Telos are scheduled to meet on May 31 to discuss the election of two Class D directors. Costa Brava was previously given an opportunity to elect Class D directors, but failed to pursue that opportunity. The Court recognized Costa Brava’s “earlier reluctance” to fill the directorships and found that the Telos was “not in violation of any statutory, charter or by-law requirements with respect to the pending election of those directors.”

The same Court has in the past has addressed several claims by the activist hedge fund, including a recent opinion regarding Costa Brava’s demand that Telos be placed into receivership.

Wood said that Telos, whose stock over the past five years has outperformed the NASDAQ composite by 100%, “is committed to treating all shareholders equitably and continuing to focus on our role as a trusted provider of security solutions to U.S. government agencies and the Department of Defense.”

$91.16 Billion Hedge Fund Driven Bank Merger To Go Through

The Managing Board and Supervisory Board of ABN AMRO Holding N.V. and the Board of Directors of Barclays PLC announced jointly this morning that agreement has been reached on the combination of ABN AMRO and Barclays for $91.16 billion, in the world's largest bank takeover.

In March hedge fund and major shareholder TCI announced in a letter to Dutch bank ABN Amro that they believe the bank is undervalued and should sell some of its assets, merge with another bank, or even sell off the whole business. ABN Amro is due to hold a shareholder meeting this week and each of the Boards has unanimously resolved to recommend this new transaction to its respective shareholders. The holding company of the combined group will be called Barclays PLC.

The merger was expected to be completed during the fourth quarter of this year, the banks said. As part of the deal, ABN Amro announced it was selling its U.S. unit, LaSalle Bank, to Bank of America Corp. for $21 billion in cash. Under the deal announced Monday, Barclays offered 36.25 euros ($49.25) for each ABN Amro share, slightly below Friday's closing price of 36.29 euros ($49.38).

"The proposed merger of ABN Amro and Barclays will create a strong and competitive combination for its clients with superior products and extensive distribution," the banks said in a statement. "The merged group is expected to generate significant and sustained future incremental earnings growth for shareholders."

Barclays CEO John Varley said the hedge fund shareholders faced a stark choice: Either deconstruct ABN Amro by opting for the competing consortium's bid, or form one of the world's largest banks by accepting Barclays takeover. TCI, the hedge fund that pushed for the bank's breakup, said it was studying the proposed deal.

5th Annual Hedge Fund Industry Award Nominees

Alternative Investment News, a publication of Institutional Investor News covering the global hedge fund industry, has announced the nominees for the 5th Annual Hedge Fund Industry Awards. The awards recognize the hedge fund leaders, managers and investors who have made significant impacts on the hedge fund industry in the past year. Winners will be announced and awarded at an annual gala dinner on June 27, 2007, at New York City's historic Gotham Hall.

Nominees in all categories were selected by the editors of Alternative Investment News based on their accomplishments during the 2006 calendar year.

Lifetime Achievement award winner:
Guy Wyser-Pratte, President, Wyser Pratte & Company

Nominees:

Hedge Fund Leader of the Year:
Absolute Capital Management
Citadel Investment Group
Bulldog Investors
Fortress Investment Group

Fund of Funds Leader of the Year:
Cadogan Management
Dorchester Capital
Eden Rock Capital Management
Harcourt Investment Consulting

Hedge Fund Launch of the Year:
Kohlberg Kravis Roberts
MatlinPatterson Asset Management
Montrica Investment Management
Oceanwood Capital Management
Paulson Credit Opportunities

Emerging Manager of the Year:
ARCIM Advisors
Hudson Bay Capital Management
MKM Longboat Advisors
Rasmala Investments

Institutional Manager of the Year:
Lyxor Asset Management
Martin Currie Investment Management
Morgan Stanley
Robeco Group

Nonprofit Investor of the Year:
Bowdoin College
MIT Investment Management Company (MIT IMC)
Macarthur Foundation

Public Pension Fund Investor of the Year:
New Jersey State Investment Council
ABP
California Public Employees Retirement System
Ontario Teachers' Pension Plan


Corporate Pension Fund Investor of the Year:
Weyerhaeuser
BT and Hermes Pensions Management
General Motors Investment Management (GMIMCo)

More at;
http://www.iialternatives.com

G7 To Discuss Hedge Fund Oversight

E.U. Finance Ministers are planning to push for more oversight of hedge funds at this week's Group of 7 meeting in Berlin, the G7 has welcomed the contribution of hedge funds to market liquidity but still see investor protection as an issue.

Industry-led measures could include reporting trades to watchdogs to stamp out possible market abuse. The Alternative Investment Management Association, a global lobby, said a voluntary code was acceptable in principle, but how it would be enforced was unclear.

Ministers meeting this weekend will look at whether "enhanced international cooperation on the regulatory response should be pursued", according to a background document. They also plan to discuss intervention in takeover battles such as the recent hedge fund fight over Dutch bank ABN AMRO.

The document says that action of some sort is needed "given that the influence of hedge funds on the efficiency and stability of the financial system has grown substantially". Hedge fund managers are also accountable to regulators even though most funds are registered offshore such as in the Cayman Islands.

The G7 is comprised of official representatives from Britain, Canada, France, Germany, Italy, Japan, and the United States. The group released their conclusion last month that the world's major developed economies show solid growth, but foreign exchange fluctuations, the rising power of hedge funds and dwindling energy supplies are a concern.

Environmental Hedge Funds Growing Rapidly

The Energy Hedge Fund Center LLC announced today that they are now tracking more than 560 energy and energy-related hedge funds in their new Directory of Energy Hedge Funds.

The vast majority of these energy focused hedge funds are based in North America but Europe is already home to 130 energy focused hedge funds and has been the focus for recent energy hedge fund formation. The directory is also now tracking more than 180 commodity hedge funds that have exposure to energy and energy-related commodities.

"Recently, we have seen a renewed interest in the creation of fund of funds in the energy and natural resources sector," reports Dr. Gary M. Vasey, Co-Principal of the Energy Hedge Fund Center, LLC. "Perhaps as interestingly, there has also been a new wave of hedge fund formation focused on energy and other related commodities since the beginning of 2007."

"We are also seeing substantial interest in the launch of larger green hedge funds and more significant growth of sustainability fund of funds this spring. We expect this trend to the accelerate as the US more toward carbon market mandates," said Peter Fusaro, Co-Principal of the Energy Hedge Fund Center LLC. "Energy and environmental hedge funds are still seen as an asset diversification play due to its non correlation."

The Energy Hedge Fund Center(EHFC) also publishes a subscription newsletter 'Energy Hedge' that tracks and announces new energy hedge funds, provides analysis of the Directory's content and includes energy hedge fund manager interviews.

InFocus Hires Hedge Fund Manager

InFocus Corporation announced that they have added hedge fund manager John D. Abouchar and Bernard T. Marren to serve as members of the Company’s Board of Directors. Abouchar and Marren were designated to serve on the Board of Directors by the companies largest shareholder Caxton Associates L.L.C.

Abouchar is an independent consultant to GRT Capital Partners, LLC, based in Boston, Massachusetts, and a portfolio manager for the GRT Technology L.P. hedge fund. Prior to joining GRT Capital Partners in 2006, Abouchar was a Senior Analyst for six years at Pacific Edge Investment Management, a $300 million value technology hedge fund based in Palo Alto, California. Mr. Marren is the Chairman, Chief Executive Officer and President of OPTi Inc., an intellectual property licensing company based in Palo Alto, California.

“Effective yesterday, we officially added Mr. Marren and Mr. Abouchar to the InFocus Board of Directors,” stated Michael Hallman, lead InFocus independent director. “We look forward to their insights and contributions as we continue the evaluation of strategic alternatives for the Company,” concluded Hallman.

InFocus is an inventor and pioneer in the projection market, InFocus Corporation's global headquarters are located in Wilsonville, Oregon, USA, with regional offices in Europe and Asia. LiteShow, LP, ASK, ScreenPlay, Play Big, Work Big, Learn Big and The Big Picture are also registered trademarks of InFocus.

ABN In Exploratory Talks With Shareholders

Last week Dutch bank and activist hedge fund manager ABN AMRO received a letter from Royal Bank of Scotland, Banco Santander and Fortis in which they invited ABN AMRO to start exploratory talks regarding their intentions, the Dutch Decree on the Supervision of Securities Trade 1995 makes these kinds of requests possible.

The bank agreed to the request for a meeting and has invited all signatories to a meeting in Amsterdam early next week to seek clarification of their intentions and interests.

ABN AMRO and Barclays also announced today, regarding their possible merger/takeover, that they have extended the exclusivity period of their talks to the end of Friday 20 April 2007. ABN AMRO and Barclays are in talks regarding a potential combination of the two organizations that the statement says, "would create value for both sets of shareholders."

The bank also said in the statement, "The discussions, which seek to incorporate the broad objectives set out on 20 March 2007, are progressing, but there can be no certainty that they will lead to a transaction or the form it will take." The two banking groups have been in merger talks since Barclays confirmed it was in "exclusive preliminary discussions" with ABN on March 20.

Netherlands-based ABN AMRO is an international bank with total assets of 899.3 billion euros ($1.2 trillion). It's hedge fund arm, ABN AMRO Asset Management has over 173 billion euros ($235 billion) in assets under management.

KBC Acquires Majority Stake in Russian Absolut Bank

Yesterday evening a deal between Belgian bank KBC Group NV and Russian bank Absolut was made in which the Belgian bank and hedge fund investor acquired 92.5% of shares in the Russian bank. It was announced in a press release this morning.

The deal values the bank at 761 million euros, ($1.03 billion) and is awaiting regulatory approval by the Central Bank of Russia. Absolut, established in 1993 and based in Moscow, is the seventh largest non-state-owned mortgage lender and offers universal banking services. Absolut has more than 1600 employees and 39 branches. KBC said it intends to keep the current key management in place.

KBC Group Chief Executive Andre Bergen said in a statement, "KBC's long-term strategic plans entail further expansion in the markets of emerging Europe. Russia is therefore an extension of our existing presence in neighboring Central and Eastern Europe."

KBC Bank & Insurance Holding Company itself was established in 1998 following the merger of three Belgian financial institutions. The Group's corporate history is a testament to the successful expansion into growth countries of Central and Eastern Europe which have joined the European Union in 2004, such as Hungary, Poland, the Czech Republic and Slovakia. KBC employs some 50,000 people and caters for twelve million customers.

Credit Suisse/Tremont Hedge Fund Index Up For March

The Credit Suisse/Tremont Hedge Fund Index is up 1.24% in March and up 3.34% for the first quarter of 2007 according to Oliver Schupp, President of the Credit Suisse Index Co., Inc.

“Despite getting off to a rocky start, global equity markets managed to recoup losses in the beginning of March and ended the month on a positive note. Markets were affected by remarks made by U.S. Federal Reserve Chairman, Ben Bernanke, that inflation is "uncomfortably high" promoting speculation that the U.S. central bank won't reduce interest rates to prop up the slowing economy, a weakening consumer confidence, and a growing housing slump,” said Mr. Schupp.

“Overall, this market environment has led to the estimation that eight of the ten hedge fund sectors will end March on a positive note. Long/Short Equity managers, in particular, were up 1.87% in March as industry themes and ongoing M&A activity provided stock specific opportunities, while superior stock selection paid off.” Performance for the Credit Suisse/Tremont Hedge Fund Index and its ten sub strategies is calculated monthly.

The Credit Suisse/Tremont Hedge Fund Index is comprised of 432 funds as of March 31, 2007. The Index is constructed using the Credit Suisse/Tremont database of more than 4,500 hedge funds. It includes both open and closed funds located in the U.S. and offshore, but does not include fund of funds.

Sallie Mae Agrees to $25 Billion Buy Out

A group consisting of hedge funds JC Flowers & Co. and Friedman Fleischer & Lowe, agreed late last night to buy SLM Corp also known as or Sallie Mae, the US's largest provider of student loans, in a $25 billion deal. Also in on the deal is J.P. Morgan Chase & Co. and the Bank of America.

The idea driving the deal revolves around using financial engineering and more-efficient management to improve Sallie Mae's balance sheet. The two New York-based hedge fund firms will control 50.2% of the company, while the banks will own the rest.

Under the terms of the deal, they said, the buyers will pay $60 a share in cash, which represents almost a ५०% premium over Sallie Mae’s battered share price before news of a potential buyout was reported in The New York Times last week. The share price has surged nearly 15% on the prospect that the company could be bought out.

JC Flowers & Co is one of the largest investment funds focused solely on the financial service sector. The fund has over $900 million in commitments from financial and strategic investors. Investors in the hedge fund include ABN Amro, AIG, Banco Santander, GE, Goldman Sachs, JP Morgan Chase among others.

Friedman Fleischer & Lowe focuses on investing in middle-market companies and currently has over $1 billion in assets under management.

London Doubles its Share of Global Hedge Fund Assets

London's share of global hedge fund assets increased from 10% to 21% between 2002 and 2006, making London one of the fastest growing hedge fund centres according to the 2007 edition of IFSL's Hedge Funds report. Assets managed by hedge fund managers based in London totaled around $360bn in 2006, up 40% on the previous year, and a six-fold increase from 2002.

New York remained the leading global location for hedge fund managers in 2006 with 36% of global assets. Its share was down however, from 45% in 2002 as growth of the hedge fund industry in Europe and Asia outpaced growth in the US. This was largely a result of a rise in institutional portfolio allocation into hedge funds in these regions during this period.

London is by far the largest center for European hedge fund managers. The 900 hedge funds located in London accounted for four-fifths of European based hedge fund assets in 2006. If figures for fund of funds and US hedge funds with a trading desk in Europe are taken into account, London's share was more than 90%. Other locations for hedge fund managers in Europe include France, Spain, Sweden and Switzerland.

Factors underpinning London's strong position include its local expertise, the proximity of clients and markets, a strong asset management industry and a favorable regulatory environment. London is also a leading center for hedge fund services notably prime brokerage services offered by the leading London based investment banks. More than 90% of European prime brokerage activity is conducted through London.

State Street Study Shows Institutional Investment In Hedge Funds Is On The Rise

According to the 2007 State Street Hedge Fund Research Study, nearly two thirds of institutional investors are now allocating more than 5% of their portfolio to hedge fund strategies, while only 4% have no hedge fund allocation. In comparison 2005 and 2006 study results showed less than half had more than 5% allocation to hedge funds and 16% had no allocation.

Although institutional investors allocations to hedge funds are relatively small, they represent the fastest growing segment of direct investors to hedge funds.

92% of institutional investors surveyed expressed either an "increased" (52%) or "maintained" (40%) level of comfort with hedge funds over the previous 12 months. Hedge funds also earned high marks from institutions for increasing absolute portfolio returns. 65% of respondents said their hedge fund investments matched expectations for gains in the absolute return of their portfolio, up from 57% in 2006.

According to the report, hedge funds and hedging strategies are becoming an accepted part of, if not a conventional choice in, the investment portfolios of institutional investors. Hedge fund strategies are continuing to evolve and some hedge funds are adopting new business models, while some traditional investment vehicles adopt hedge fund-like characteristics, blurring the line between alternative and traditional investing.

Joseph Hooley, Vice Chairman of State Street says in the report "What we have learned from these studies, customers and industry participants is that hedge funds are becoming less "alternative" all the time...Investors are beginning to see beyond the isolated cases of fraud and mismanagement that brought negative attention to the industry," and, "We believe plan sponsors and other institutional investors will be able to successfully navigate the risks and mine the opportunities in these important investment products."

The 2007 State Street Hedge Fund Research Study was conducted with the input of global asset owners that collectively manage more than ¤1 trillion in assets, representing corporate pension plans (21%), public and government pension plans (32%) and endowments and foundations (44%).

The "Index" Reports Positive Hedge Fund Returns

The Greenwich Global Hedge Fund Index, one of the world's largest hedge fund databases, reported returns of +0.87% in March, closely followed by the Greenwich Investable Index returning +0.86%.

84% of the 1,025 hedge funds reporting thus far had positive returns. 16 out of 18 index strategies outperformed the S&P 500, the two exceptions being Futures and Short Selling, which together represent 10% of the Global Index. Market Neutral strategies were positive for the 17th consecutive month.

Event-Driven managers capitalized on M&A strength, returning +1.18% in March. Long-Short Equity strategies captured the upside across global equity markets, yielding +1.26%. It proved to be a difficult month for Futures managers, who were unable to recover from volatility early in the month, to end down -1.64%.

The Greenwich Investable Index has continued to achieve its investment objective of closely tracking the Global hedge fund Index, posting year-to-date returns of +2.62%--within nine basis points of the Global Index year-date +2.71%.

Both Greenwich Indices have outperformed market benchmarks year-to-date. The S&P 500, MSCI World Equity, FTSE 100, and Lehman Brothers Aggregate Bond indices posted March returns of +1.12% (+0.64% Q1), +1.59% (+2.06% Q1), +2.21% (+1.40% Q1), and 0.00% (+1.50% Q1), respectively.

The Greenwich Investable Index, comprising 51 funds, adds investability, active management and liquidity to the broad Greenwich Global Hedge Fund Index. Unlike other investable indices, it references actual hedge funds as opposed to separately managed accounts that merely attempt to replicate the returns of hedge fund vehicles. Since inception January 2003, the Investable Index posted an annualized return of +10.70% versus +11.64% for the Global Index. The Investable Index is reported monthly net of a 0.04% Index calculation fee.

Hedge Fund Manager To Launch Multi-Strategy China Fund

UG Investment Advisers, a hedge fund manager with over $500 million invested in China's Qualified Foreign Institutional Investor program, has announced that they are looking to raise $200, to $500 million more for the launch of a Greater China multi-strategy hedge fund, a senior executive with the firm said in a Reuters interview.

UG Investment Advisers has six main hedge fund vehicles, including the UG Formosa Patriot Fund, UG Formosa Multi-Strategy Fund, UG Great Wall Hidden Value Fund, UG-Adwell Great Wall Absolute Return Fund, UG Hidden Dragon Balance Fund and UG Hidden Dragon Undervalued Assets Fund. The new vehicle's strategies would include looking for arbitrage opportunities in closed-end funds listed in mainland China, said Richard Fan, a partner and director with the $900 million hedge fund manager.

"It's in the very preliminary stages right now. If it does proceed and go forward it will probably launch in the next three months or so," he told the Reuters Hedge Funds and Private Equity Summit in Singapore. Fan said UG wants to launch a new multistrategy fund because the Formosa vehicle is currently about 70 percent invested in Taiwan, and the firm wants the flexibility to put a greater percentage of assets to work in mainland China.

The new fund would be focused on investing in China's more than 50 closed-end funds, which typically list on an exchange and trade like stocks. While Asia-focused hedge fund assets have risen six-fold over the past five years, rising more than 30 percent last year alone, Fan said UG is not overly concerned about competition when it comes to closed-end fund arbitrage strategy in China.

State Street Hedge Fund Report

State Street Corporation, the world’s leading provider of financial services to institutional investors, released a report on hedge funds as part of its series of proprietary reports designed to advance the dialogue around key themes and trends within the financial services industry.

The new Vision paper on hedge funds offers a comprehensive overview of the impact of rising institutional allocations to alternative investment vehicles and the implications of this trend for institutions and the hedge fund industry going forward. State Street’s report provides insightful explanations of hedge fund investing trends and techniques, as well as an in-depth analysis of the evolution of risk management, new developments in the pursuit of alpha, and a global review of hedge fund regulation.

"As part of the ongoing series designed to provide the industry with timely insights, this Vision paper responds to a need for greater understanding of all aspects of hedge fund investing," said Jay Hooley, vice chairman of State Street. "Given the results of our third institutional hedge fund study released last month, it is evident that institutional hedge fund investing is becoming less ‘alternative.’ We hope this new report will help industry professionals enhance their knowledge of hedge funds and navigate the risk and opportunities available in these important investment products."

The report draws on State Street’s extensive insights from across the company to bring a unique insight into the hedge fund industry.

State Street Global Advisors, State Street’s investment management arm, has two decades of absolute return investment expertise and offers an array of strategies focused on generating alpha.

Through its acquisition of International Fund Services (IFS) in 2002, State Street significantly expanded its global hedge fund servicing capabilities and now administers more than $200 billion in hedge fund assets from servicing centers in New York, Dublin, Luxembourg and Toronto.

Citigroup In Talks Over $600m Hedge Fund Buy Out

Citigroup has been in talks with year-old hedge fund Old Lane, with a plan to spend $600m on the acquisition of the hedge fund. At an estimated 45% gross margin on $150 million in revenue, the hedge fund could clear $67.5 million.

Ex-Morgan Stanley money manager, Vikram Pandit, founder of Old Lane Management has heavily invested in Indian securities, real estate and infrastructure projects.Citigroup would add about $4 billion in assets under management in the deal, and would make Pandit chief executive of its alternative investments unit.

Launched early last year, Old Lane has between $150 million and $160 million in revenue, based on a 2% management fee and 20% share of any profit formula. In its first full year of business the hedge fund returned around 10% to investors.

The alternative investments unit is the smallest of Citigroup's four main businesses, with about 875 employees. It has $49.2 billion of private equity, hedge fund, real estate and other assets, including $10.7 billion of Citigroup's own money.

Carlyle Group to Launch Hedge Fund Business

Private equity firm Carlyle Group is launching a $1 billion hedge fund called Carlyle Multi Strategy Partners, the fund is said to have a wide-ranging investment strategy.

Last year, the $56 billion firm hired 2 new managers to head up a hedge fund business called Carlyle Blue Wave and has since put together a team of 55 for the unit. Carlyle, based in Washington, D.C., declined to comment on the timing of the hedge fund's launch.

There has been a global rush of investment dollars into lightly regulated private partnerships such as private-equity firms and hedge funds. Private-equity firms use client funds to buy companies, take them private, restructure them, and sell them again, typically three to five years later. Hedge funds, by contrast, use clients' money to invest in a variety of securities and investments, frequently trading very actively and quickly in public markets.

Carlyle Group has over 400 investment professionals operating out of offices in 18 countries to uncover opportunities in North America, Europe, Asia, Australia and Africa. Carlyle has investments in 48 funds, including buyouts, venture capital, real estate and leveraged finance, they are also reported to be considering investing in renewable energy infrastructure.

CBB Sets Up Hedge Fund Regulations

The Central Bank of Bahrain (CBB) is finalizing new regulations that they hope will open up the development of a regional industry of hedge funds, derivatives and other alternative investment instruments.

Requirements for the registration of such higher risk and volatile instruments in Bahrain are contained in a new regulatory framework for collective investment undertakings (CIUs), which the CBB plans to issue later this month.

The new framework, which updates regulations governing mutual funds, will also introduce Bahrain's first-ever rules allowing CIUs targeting professional investors. It will permit exempt schemes subject only to limited regulation (such as hedge funds), but which may only be sold to a high net worth institutional and investor base.

At present, Bahrain leads the region as a hedge fund center, with over 2,000 authorised funds, including over 100 locally domiciled funds. The new CIU regulations will further enhance and develop the market, by allowing a much broader range of CIU to be domiciled and offered in Bahrain, all within a credible regulatory framework.

The new framework will create a new category of "Exempt" schemes. These schemes will be required only to register with the CBB, rather than be authorized, and will not be subject to on-going supervision. They will not be regulated, but may only be sold to a restricted investor base;- those able to make a minimum investment of US$100,000, and with at least US$1 million in financial assets, and subject to verification by the institution selling the product that the investor fully understands the risks involved.

The rules for Exempt schemes will allow hedge funds and other higher risk alternative investment vehicles to be legally domiciled and/or sold in Bahrain, within an appropriate regime that recognizes the sophistication of this limited investor base.

"Currently, Middle East investors have to look overseas for such products. The CBB regulations, however, will enable regional access to such instruments." said Mr. Al Baker, Executive Director at the CBB, whose responsibilities include the supervision of CIUs.

Rivals to Bid in Hedge Fund Driven Dutch Bank Sale

The Royal Bank of Scotland Group and Spanish bank Grupo Santander Central Hispano of Madrid are combining their efforts to counter bid Barclays in the hedge fund driven sale of Dutch bank ABN.

ABN Amro Holding was in preliminary discussions with Barclays about creating a company worth more than $177 billion, this would be a record deal in the financial sector. In March hedge fund TCI announced in a letter to Dutch bank ABN Amro that they believe the bank is undervalued and should sell some of its assets, merge with another bank, or even sell off the whole business.

Activist hedge funds and shareholders Polygon and Centaurus backed up TCI's demands by increasing their stakes in ABN in order to pressure the bank into the sale. According to a British newspaper report, the offer could be presented immediately after Barclays makes a formal bid for the bank and would involve a break-up of the Dutch bank.

In 2005 TCI was part of a group of activist investors who criticized Deutsche Börse for its $2.5 billion bid for the London Stock Exchange, eventually causing Werner Seifert, the chief executive to resign. It turns out TCI, which owned 8% of Deutsche Börse, actively recruited some powerful partners, including Atticus Capital, Merrill Lynch, and Fidelity Investments, in order to facilitate the move.

Centaurus is one of the activist shareholders that was embroiled in a dispute with Dutch companies Stork NV and Royal Ahold NV last year, and Polygon Investment Partners is a British equity fund that was involved in the sale of Dutch publisher VNU.

Hedge Fund Investors of Tommorow Compete

Over 2,000 post-secondary students acted as hedge fund managers for the InvestYoung National University Stock Market Competition which ran from October 16, 2006 to March 9, 2007. Approximately 20,000 trades were executed on over 2,800 symbols across all major North American markets.

All ten finalists posted returns that more than doubled the performance of the RBC Capital Markets Hedge 250 Index, which is a representative benchmark of hedge fund performance. The most actively traded securities were Apple, Google, Microsoft, Yahoo! and Sony.

Students were given the opportunity to invest a simulated portfolio of $1,000,000 Canadian (US $869,000) in securities traded on major North American exchanges.

Jason Mah, 26, a fourth year student attending University of Victoria triumphed in the competition. He placed first with a final portfolio value of $1,451,619 representing a 45% return on investment. His strategy was to invest in distressed companies ahead of quarterly earnings announcements. Mah notes, "It is important to always look out for opportunities. I had an incredible time networking and discussing strategies with competitors across the nation." Mah is graduating in the fall with a Bachelor of Economics and looks forward to working on Wall Street.

The InvestYoung Online Stock Market Competition is Investors of Tomorrow's flagship program allowing students to learn about money management through hands-on experience managing a virtual investment portfolio. Investors of Tomorrow also operates a keynote speaker series that has brought some of Canada's most prominent financial industry leaders back into the classroom.

Alea Group Agrees to Hedge Fund Takeover

Alternative asset manager Fortress Investment Group has announced plans to buy up re-insurance company Alea Group Holdings for £162 million. ($319.6 million)

"The independent directors are pleased to recommend the acquisition, which results from the strategy that management have pursued over recent months to bring greater stability to the company," Chairman of Alea, John Reeve said in a statement.

Alea put itself up for sale in 2005 following $0.8 million in record storm losses in 2005, down from $178.9 million the year before. Net premium revenue fell to $215.9 million from $1.087 billion due to a decision to cease writing new business.

Fortress said it would pay 93 pence a share in cash, 1.1% less than Alea's closing price Tuesday but a 15% premium over its average price for the past six months. That would value the offer at $320 million.

Fortress Investment Group is a global hedge fund investor with over $30 billion in assets. Headquartered in New York the company has affiliates with offices in Dallas, Frankfurt, Geneva, Hong Kong, London, Los Angeles, Rome, San Diego, Sydney and Toronto. Fortress raises, invests and manages private equity funds, hedge funds and publicly traded alternative investment vehicles.

Electronic Tracking For Cayman Domiciled Funds In Place

As domicile for approximately 80% of the world's hedge funds, the Cayman Islands have now implemented a mechanism for the electronic submission of annual returns for all funds licensed, registered and administered in the Cayman Islands.

The Cayman Islands Monetary Authority's (CIMA) Managing Director Cindy Scotland said, "Not only will we be able to more efficiently handle the audited accounts that are submitted but we will be in a position to provide better aggregate industry statistics than we have been able to provide so far. This will benefit all stakeholders." and "Because the Cayman Islands is the domicile for a majority of the world’s offshore hedge funds, we believe CIMA’s E-reporting system will be able to improve the reliability and quality of aggregate fund industry statistics globally".

Following successful industry testing, CIMA released on its website the electronic Fund Annual Return (FAR) form and has opened the internet portal through which funds’ local auditors will submit the required returns. Related guidance notes have also been released.

CIMA has been developing the electronic reporting initiative for funds for several months, with assistance from its retained business advisor Ernst & Young and with input from the funds industry. The Monetary Authority expects the initiative to facilitate more efficient collection and processing of returns from the over 8,300 funds it now oversees.

The legislation implementing E-reporting for funds, the Mutual Funds (Annual Returns) Regulations 2006, was passed on 27 December 2006.

SkyBridge Capital Invests in IronShield Hedge Fund

New York based hedge fund investor SkyBridge Capital, announced plans to invest in Ironshield Capital Management, a London-based hedge fund scheduled to launch later this year.

Ironshield Capital Management is the latest in a series of investments that SkyBridge has made in up and coming hedge funds. Other hedge funds they have arranged financing for include Westport Capital Partners, Brompton Cross Capital Advisers, Abdiel Capital and Outpoint Capital Management.

SkyBridge will provide Ironshield with a team of people to help build up the new fund's operation. The amount of the investment was not disclosed. Ironshield is led by David Nazar, previously a principal at Bank of America in London.

SkyBridge Capital is a seeding firm created in 2005 by Anthony Scaramucci, co-founder of Oscar Capital, a hedge fund acquired in 2001 by Neuberger Berman; and Andrew Klein, co-founder of Soleil Securities Group.

European Mutuals Push For Hedge Fund Access

European mutual fund managers are pushing regulators to allow them to buy into derivatives of hedge fund indexes.

Approval from regulators would allow European Union-regulated funds to put some of their $7.3 trillion of assets into derivatives tracking the hedge fund indexes, allowing them to profit from hedge fund gains in a safer, regulated way.

Relatively few hedge funds are actually domiciled in European countries, so that although their use has been fairly widespread amongst institutional investors for some time, they have been limited to high net worth individuals able to pay the high minimum initial investments that are often in place.

Fund industry representatives argued in front of the Committee of European Securities Regulators that indexes linked to hedge funds performance have increasingly become standard financial indicators.

Although ruled unsuitable for mutual funds last year, the mutual funds are pushing to be allowed to bet on the performance of hedge funds just as they can for other financial indicators such as stock indexes.

"These are a class of assets that retail investors could benefit from," said Stephane Kuzmin, responsible for regulatory matters for index-linked funds at Barclays Global Investors Ltd., the hedge-fund arm of Barclays Plc, at the hearing. "We'd welcome to have some hedge-fund indices available."

The EU executive agency in Brussels may consider broadening those rights to permit buying of funds of hedge funds when it considers future rule revisions.

European countries including Germany, Spain and the U.K. have permitted limited investment in funds of hedge funds or other means of investing in the vehicles traditionally restricted to institutional investors or people with $1 million or more.

Hedge Fund To Separate Brokerage Arm to New York

Top ten hedge fund firm Man Group said on Friday it is considering splitting off its brokerage arm into a new £2 billion ($3.9 billion) company. The de-merger would separate its U.S. brokerage unit and list it in New York.

Man group has funds under management of more than $61 billion as of January. The listing of a majority interest in the unit, Man Financial, will take place in the third quarter of 2007, subject to market conditions remaining favorable, the firm said. It will be renamed MF Global following the separation, which is subject to shareholder approval, and net proceeds will be returned to shareholders later in the year.

A Man Group spokesman said; "Man regularly reviews the structure of its business, in line with our commitment to achieve superior returns for our shareholders...... Separation will allow each business to focus even more effectively on their separate growth strategies and take advantage of the significant business development opportunities in each of their industries."

Man Group, best-known for its hedge fund activities, believes its brokerage business is being overlooked and would be worth far more as a separate company. Man Financial's Managing Director Kevin Davis will become CEO of the new group. Chris Smith will be chief operating officer and deputy CEO, while Amy Butte will be chief financial officer. The non-executive chairman will be Alison Carnwath.

French Candidate Disapproves of Hedge Fund Strategies

French Interior Minister and presidential candidate Nicolas Sarkozy criticized hedge funds as an example of undesirable speculation, saying he didn't approve of companies...."that buy up a company, sell it off in pieces, sack 25% of the staff in the meantime, collect 25% profit and create zero wealth."

Sarkozy said, "I don't want a speculative capitalism. I want a capitalism that creates riches." He added that a second topic for European debate would be "moralizing" the region's model of financial capitalism. Speaking during a television debate he argued that a weaker Euro should be a tool to help European industry: "We've built the second currency in the world and we're the only region in the world that obstinately refuses to put our currency to the service of jobs and growth. It can't last," he said.

Sarkozy is widely viewed by admirers as France's best hope for economic reform, but he has sought to temper a reputation for unpopular liberalism by emphasizing the role of the state and leaping to the defense of French industrial champions. In common with other French politicians, he has also called repeatedly for a change in the European Central Bank's mandate, to include growth and jobs among its criteria when setting interest rates.

On Sunday, he accepted that those demands, requiring unanimous agreement, were unrealistic. But said that if elected, he would ask his finance minister to call a Eurogroup meeting with Eurozone colleagues to discuss exchange rate strategy and "convince our partners to move forward."

NFL Hedge Fund Case To Proceed as Planned

A federal judge in Atlanta ruled that the NFL players who entrusted their funds to Kirk Sean Wright, CEO of hedge fund International Management Associates of Atlanta, may move forward with their case over lost investments.

The FBI in association with the IRS, DOJ and SEC investigated why requests by current and former NFL players for their funds were ignored. The amount of the loss of funds in question is about $20 million. The investigation resulted in charges against Mr. Wright and a trial date is pending.

"It's a tremendous victory for our clients and all former and current players," said their lawyer, Jim Evangelista, of the law firm Motley Rice.

The ruling means the case will go to the discovery phase, in which the players' attorneys will seek documents and depositions of NFL officials about why they recommended the now-bankrupt and defunct hedge fund.

The players accuse the NFL and union of breach of fiduciary duty for approving the services of Kirk Wright and Nelson Keith Bond, co-heads of the bankrupt hedge fund, without doing background checks. Wright was ordered on Feb. 12 to pay the U.S. Securities and Exchange Commission $20 million in its lawsuit over the failed fund.

Wright and his hedge fund are accused of collecting between $115 million and $185 million from at least 500 investors since 1997 and misleading some of them through false statements and documents to believe the value of those investments was increasing.

Top Ten Global Hedge Fund Firms

1. JPMorgan Asset Management, including Highbridge Capital Management, main offices in N.Y. Assets under management; $34 billion as of Jan '07.

2. Goldman Sachs Asset Management, also in New York, USA. AUM $32.53 billion.

3. Bridgewater Associates, Westport, USA. $30.2 billion.

4. D. E. Shaw Group, N.Y. $26.3 billion.

5. Farallon Capital Management, San Francisco, USA. $26.2 billion.

6. Renaissance Technologies Corp. East Setauket, USA. $24 billion.

7. Och-Ziff Capital Management, N.Y. $21 billion.

8. Cerberus Capital Management, N.Y. $19.15 billion.

9. Barclays Global Investors, San Francisco, USA. $18.9 billion.

10. Man Investments Limited (AHL single-manager strategies only) London, UK. AUM $18.8 billion.

The statistics represent single-manager hedge funds only. Funds of funds, which are tracked by InvestHedge, are not included in the $2 trillion calculations.

Global Hedge Funds now Over 2 Trillion in Assets

Assets in global hedge funds have now reached more than $2 trillion according to new research compiled by HedgeFund Intelligence, publisher of the newsletters and databases of EuroHedge, AsiaHedge, South AfricaHedge and InvestHedge, as well as the U.S.-based magazine Absolute Return.

The findings of this research, which is published in a new Global Review from HedgeFund Intelligence, shows a rise in global hedge fund assets from just over $1.5 trillion in January 2006 to $2.079 trillion by January of this year - a rate of growth in assets of just over 30% in the past year.

According to the latest research from InvestHedge - which tracks investors in hedge funds - an increasing proportion of this money is coming from institutional investors, with the majority of the assets allocated to hedge funds (over $1 trillion) now coming via the fund of funds sector.

The HedgeFund Intelligence research process was completed with the latest EuroHedge asset survey, which showed that assets in European hedge funds had reached almost $460 billion by January of this year - up from $325 billion the year before, and at the fastest rate of growth in the past year (about 40%) among the major regions around the world.

The latest AsiaHedge asset survey showed that combined assets in Asia-Pacific hedge funds had reached $147 billion (including Asia-Pacific funds managed from the U.S. and Europe) - up from $115 billion the year before.

In the U.S., HedgeFund Intelligence calculated that total hedge fund assets have now reached almost $1.5 trillion - including some $1.198 trillion accounted for the Absolute Return Billion Dollar Club alone (which was up from about $850 billion a year earlier).

After adjusting for a small amount of double-counting (such as for funds managed in one region but investing into another), the combined assets of hedge funds in the U.S., Europe and the Asia-Pacific now stand at $2.006 trillion. Adding in other regions - including Canada, Latin America and South Africa - takes the combined total to $2.079 trillion.

Study Shows Hedge Funds are not Understood by Investors

According to a new Spectrem Perspective report released today, "Alternative Investments: Are They a Priority for Affluent Portfolios?", just 18% of affluent investors, defined as having more than $500,000 in investable assets, say they understand hedge funds. Structured products are understood by only 15% of these investors and private placements come in at 19%.

At the same time, just 9% of affluent investors say they are interested in hedge funds. A similar 9% express interest in structured products, with 10% interested in venture capital, 11% in private placements and 11% in futures.

"While hedge funds have been in the news like no other financial product recently, affluent investors still don't feel they understand these alternative investments. This gap in understanding corresponds with a distinct lack of interest in hedge funds and other alternative investments such as structured products and private placements.

Financial services providers offering these products need to be proactive in educating affluent investors about their risks and rewards. Given their lack of interest, it seems unlikely these investors will step forward themselves seeking more information," said Catherine S. McBreen, Managing Director of Spectrem Group.

When asked which of five specific alternative products were the riskiest, affluent investors selected hedge funds (39%), followed by commodities (32%), precious metals (14%), private equity (8%) and REITS (7%).

The Spectrem Perspective(TM) report, "Alternative Investments: Are They a Priority for Affluent Portfolios?" is based on telephone interviews conducted in late 2006 with 514 affluent households, defined as those with more than $500,000 of investable assets. The margin of error is plus or minus 4.3 percentage points.

Hedge Fund Faces Fines of up to $25 Million

A hedge fund accused of defrauding mutual funds of $2.4 million in 2003 could face additional fines under a proposed plea agreement filed Tuesday in U.S. District Court in Philadelphia.

The guilty plea would mark the first criminal case in U.S. history against a hedge fund for deceptive market timing. Traders can calculate their purchases to take advantage of the lag in time before the mutual fund is updated. Many mutual funds have established methods to detect market-timing and ban those that engage in the practice.

Among other things, the U.S. attorney's office said that Gerbasio and Beacon Rock set up more than 30 accounts to evade detection. Under the agreement, in which Beacon Rock Capital LLC is to plead guilty to one count of securities fraud, a judge may levy a fine of up to $25 million, although the guidelines for such a violation call for a range of $1.26 million to $2.52 million, said Derek Cohen, an assistant U.S. attorney in Philadelphia.

Beacon Rock Capital also has agreed to forfeit $475,905 as a result of a "market-timing" scheme that netted the hedge fund $2.4 million. The plea agreement is scheduled for a hearing on April 4. In exchange for the company's guilty plea and cooperation, the government is agreeing not to prosecute the two principals, Blake Singer and Bryant Jaksic.

Hedge Fund Film Review

"Blood Diamond" was a well spent couple of hours, DiCaprio was convincing in his role as a Rhodesian "soldier of fortune" and of course theres the well meaning reporter played by Jennifer Connelly.

Quite realistic in its cruelty and bloodshed, it could be classified as fairly disturbing. Djimon Hounsou plays the father and husband of a lost family who alone knows the whereabouts of a stone that will give each of them what they want.

Financed by hedge fund firm Stark Investments, the film has an Oscar nomination, and is causing quite a stir in the world of diamonds. "People wouldn't buy a diamond if they knew it cost someone their hand." Says Maddy Bowen (Connelly) while wading through the bloody aftermath of a raid by child soldiers in the Sierra Leone.

Other hedge fund movies also in the Oscar running this season; "Poseidon." also by Stark Investments, "The Pursuit of Happyness" by hedge fund Relativity Media and "Borat." by hedge fund Dune Capital Management.

Cayman Islands & Hedge Funds

Approximately 80% of the world's hedge funds are believed to be domiciled in the Cayman Islands. As a result, Cayman Islands hedge fund companies and service providers, such as law firms, accounting firms, and administrators, are employing innovative recruiting techniques to attract and retain professionals.

Some representatives from Cayman-based firms, such as Maples and Calder, KPMG, and Walkers, are talking from their own experience about the new topics on the Cayman agenda, such as onshore vs. offshore employment, how working in offshore financial centers seem to be a preferred career move for hedge fund professionals.

Incentives such as weather and lifestyle are attracting employees to the Caymans, a sophisticated work and family support system encourages them to stay. There have also been recent programs set up by the Cayman private sector firms, aimed at employing local citizens to work in the financial sector.

Hedge funds returned some 13% in 2006, compared with the 15.8% return of the S&P 500 Index, according to industry tracker Hedge Fund research, Inc. of Chicago.

Email me or leave a comment if you want more info on contacting these people, the hedge funds listed above have offered to speak or give advice on moving to the Caymans.

British Hedge Funds Back Up TCI In Dutch Bank Attack

ABN Amro Holding NV said last week it was in preliminary discussions with Barclays about creating a company worth more than $160 billion, this comes after pressure from activist hedge fund TCI asking to split up of the Dutch bank.

Activist hedge funds Polygon and Centaurus are said to be supporting TCI's demands and have also built a stake in ABN in order to pressure the bank into the sale.

The Children's Investment Fund Management(TCI), a $3.8 billion hedge fund, announced in a letter to Dutch bank ABN AMRO last month that they believe the bank is undervalued and should sell some of its assets, merge with another bank, or even sell off the whole business.

In 2005 TCI was part of a group of activist investors who criticized Deutsche Börse for its $2.5 billion bid for the London Stock Exchange, eventually causing Werner Seifert, the chief executive to resign. It turns out TCI, which owned 8% of Deutsche Börse, actively recruited some powerful partners, including Atticus Capital, Merrill Lynch, and Fidelity Investments, in order to facilitate the move. Centaurus is one of the activist shareholders that was embroiled in a dispute with Dutch companies Stork NV and Royal Ahold NV last year, and Polygon Investment Partners is a British equity fund that was involved in the sale of Dutch publisher VNU.

TCI said, "We believe that this strategy would not only create significant shareholder value but also would best serve all the stakeholders who otherwise would suffer over the long term from the structurally declining competitive position of ABN AMRO,......In 2006 they again committed to cut costs and they have so far failed to deliver," the hedge fund said.

Asian Regulators Discuss Hedge Funds

About 40 securities regulators from around Asia and the Pacific are meeting this week to discuss hedge funds.

The regional seminar on Collective Investment Schemes/Hedge Funds is taking place in Beijing today through the 30th as part of the APEC Financial Regulators Training Initiative. The regulators are coming from India, Indonesia, Malaysia, Pakistan, Singapore, Thailand and the People's Republic of China.

Min Tang, Deputy Country Director and Chief Economist for ADB's office in Beijing said "It is important to strengthen financial regulation in the region through these cost-effective programs for bank supervisors and securities regulators."

"On behalf of the China Securities Regulatory Commission, I welcome the opportunity" said Dr. Sun Jie, Director General of the commission's Department of Fund Supervision. "It presents a forum for regulators to discuss and learn from the expertise of developed countries like the United States and Australia, which have been developing their regulatory framework for Collective Investment Schemes over many years."

In May 1998, the APEC Finance Ministers Meeting endorsed the establishment of the APEC Financial Regulators Training Initiative to enhance training efforts for national and regional financial regulators within Asia.

ADB, based in Manila, is dedicated to reducing poverty in the Asia and Pacific region through pro-poor sustainable economic growth, social development, and good governance. Established in 1966, it is owned by 64 members - 46 from the region. In 2005, it approved loans and grants for projects totaling $6.95 billion, and technical assistance amounting to $198.8 million.

Trading Bonuses & Hedge Fund Sales

A major new survey of salary and bonus packages awarded to stock market traders globally reveals Monday that those operating in the Middle East achieved the highest percentage increases ahead of their counterparts in London and on Wall Street.

The sixth annual Napier Scott survey, conducted among 3,000 front office traders and sales people, reveals that Middle East packages increased by 25-30% while those in the UK went up by 17-22%, and only 10-15% in the US.

Shaun Springer, CEO of Napier Scott Executive Search, of London, said: 'The hike in Middle East salaries and bonus reflects the growing appetite for more sophisticated financial products and increasing pressure for talented professionals in this market.

Hedge Funds sales continue to be the principal area of hiring within the marketing functions although less pronounced than in 2005. The survey is the first to be published post the 2007 bonus round.

While those in trading enjoyed the highest percentage increase, and in terms of people moves in asset classes, Equity Derivatives have been the most active. They have also enjoyed the highest percentage increase in salary packages for sales and trading.

"Talk of capping City bonuses can only be counter productive. If those operating in the markets are not allowed to make these profits, from which their remuneration packages are based, they will be moved elsewhere by their banks or indeed, the whole operation."

Springer said that although he was confident that London's supremacy as the global financial center would continue, he doubts bonus levels in the UK would continue to increase at the same rate as in recent years. There is the possibility of this year's bonuses exceeding those of 2008. Since 2002 when many City bonuses were virtually halved following 9/11 and a series of stock market shocks, packages have doubled.

BISYS Wins European Hedge Fund Award

At the inaugural Who’s Who of European Hedge Fund Lawyers awards dinner, BISYS Alternative Investment Services, received the Best Single / Multi-Strategy Hedge Fund Administrator award. This ceremony celebrated the leading service providers in the European hedge fund industry.

This prestigious honor was based on BISYS' commitment to clients, business growth, investment in technology, strategic partnerships and strong client feedback. BISYS' strategic partners - Linedata Services' Beauchamp and RiskMetrics Group, also won awards for Best Hedge Fund Technology Supplier and Best Risk Management Software Supplier, respectively.

"We are delighted about winning this award, which is a tribute to the commitment of our dedicated service teams," said Ronan Daly, president of BISYS Hedge Fund Services, who accepted the award on behalf of BISYS. "

BISYS Alternative Investment Services is a global provider of administrative, accounting, advisory, and tax services for the alternative investment industry with over $275 billion in assets under administration. BISYS has approximately 500 clients and over 1,500 funds, including hedge funds, private equity funds, fund-of-funds, and other alternative investment products. BISYS Alternative Investment Services is a division of The BISYS Group, Inc.

Study Shows Institutional Investors are Comfortable With Hedge Fund Investing

State Street Corporation released its third institutional investor hedge fund study, the study was conducted late last year in conjunction with the 2006 Global Absolute Return congress.

According to the study, more than half of respondents indicated that their governing bodies are more comfortable investing in hedge funds today than they were 12 months ago. Reinforcing this interest, more than half of boards also spend 15% or more of their time on the subject. Asset owners participating in the study included representatives from global pensions with investable assets totaling more than $1 trillion.

"The findings of our study reinforce the industry trend we've been witnessing among our client base − investment boards are overwhelmingly accepting that hedge funds are a viable option for their investment allocations," said Gary Enos, executive vice president and head of State Street's alternative investment servicing business. "They are also discovering the various ways hedge funds can be incorporated into portfolios based upon investors' risk appetite, return targets and overall investment objectives."

Results also show that the percentage of asset owners investing in alternatives increased significantly over last year. This year, only 4% of asset owners indicated they have no hedge fund investments, down from 16% last year.

Nearly half cited a need for additional reporting and analysis on the part of hedge fund managers and more rigorous due diligence practices. In addition, the same number also agreed that obtaining an accurate valuation of hedge fund holdings can be problematic.

"The tools, methods and best practices for managing risk will further develop as hedge funds become a tried and true staple of institutional portfolios," said Enos. "Particularly in light of regulatory pressure and changes in accounting practices, asset owners will continue to push hedge fund managers and third-party service providers, such as administrators, to develop and deliver enhanced risk and transparency solutions."

State Street Corporation provides institutional investors with research and trading services. With $11.9 trillion in assets under custody and $1.7 trillion in assets under management, State Street operates in 26 countries and more than 100 geographic markets worldwide.

SEC Returns $38 Million To Hedge Fund Investors

The Securities and Exchange Commission today announced in a press release the distribution of approximately $38 million in Fair Funds to approximately 810 mutual funds that were victims of fraudulent market timing and late trading by the Veras hedge funds.

The funds distributed reflect the entirety of the disgorgement and civil penalties paid by the Veras hedge funds and their principals to settle charges of unlawful market timing and late trading brought by the SEC.

The Sarbanes-Oxley Act of 2002 gave the SEC authority to increase the amount of money returned to harmed investors by allowing civil penalties to be included in Fair Fund distributions. To date, the SEC has distributed over $1 billion in Fair Funds.

Linda Chatman Thomsen, Director of the Division of Enforcement, said, “Today’s distribution marks another significant step in the Commission’s vigorous program to return money to investors injured by mutual fund trading abuses.”

On Dec. 22, 2005, the SEC brought settled administrative proceedings against the Veras Capital Master Fund, VEY Partners Master Fund, Veras Investment Partners, LLC, Kevin D. Larson, and James R. McBride for their participation in a fraudulent market timing and late trading scheme. Respondents consented to entry of the settlement order without admitting or denying the SEC’s findings.

The settlement order found that from January 2002 through September 2003, respondents used deceptive techniques to continue market timing in mutual funds that previously had detected and restricted, or that otherwise would not have permitted, the Veras hedge funds’ trading.

The settlement order provided for distribution of the Fair Fund directly to the mutual funds affected by Veras’ misconduct. The settlement funds are being distributed by the U.S. Treasury directly to the affected mutual funds pursuant to the distribution plan approved by the SEC on Oct. 4, 2006.