Ramius Challenges Immersion Choice of Directors

HedgeCo News - Alternative investment and hedge fund advisor Ramius Value and Opportunity Advisors LLC, a subsidiary of Ramius LLC., (Ramius) has challenged the board of top touch technology company Immersion to elect a new Director. Ramius also nominated a list of directors for presentation at Immersion’s 2011 annual meeting of shareholders.

“As Immersion’s largest shareholder, we have continually tried to work cooperatively to enhance the composition of the Board for the benefit of all shareholders. “Ramius Managing Director Peter Feld said in a letter to the members of the Board of Directors of Immersion Corporation, “Unfortunately, our efforts have been rebuffed at every turn. Meanwhile, the current Board has overseen extremely poor long-term operating and stock price performance.”

Ramius owns approximately 8.8% of the shares outstanding. In the letter, the hedge fund advisor outlined its views regarding the weak long-term operating and stock price performance and the need for change on the Board of Directors.

Ramius claims the current Director has no experience in technology and was placed in the position due to direct ties to the Chairman of Immersion, Jack Salticha. Only 27% of Immersion’s shareholders voted to support his election to the Board at the 2010 annual meeting.

“Since the end of 2007, Immersion has burned through approximately $78 million of cash, equivalent to $2.77 per share or 46% of the Company’s current stock price. For this substantial investment, which included over $30 million in research and development expenses, revenues have increased by a dismal $1.5 million or 5%,” the letter said.

Dialectic Capital, the second largest shareholder of Immersion, publicly disclosed that they too had nominated a slate of directors for election at the 2011 annual meeting.

“This should be a wake up call to the Board.” Ramius said, “Your shareholders are not happy.”

Hedge Fund Managers Agree To Testify Against Rajaratnam In Exchange For Leniency

HedgeCo News - Two ex-Galleon hedge fund managers pleaded guilty yesterday to insider trading. Adam Smith agreed to testify against Galleon hedge fund founder Raj Rajaratnam in exchange for protection from prosecution for other crimes.

Michael Cardillo also pleaded guilty to the same charges. The ex-hedge fund managers agreed to give up any money they made, and Cardillo also agreed to testify against Rajaratnam next month. Smith and Cardillo could face up to 20 years in prison on the securities fraud counts.

Rajaratnam's co defendant Danielle Chiesi also pleaded guilty last week. She was accused of receiving insider information from Robert Moffat, Jr., who also pleaded guilty in the Galleon hedge fund fraud scheme.

Rajaratnam was taken into custody in New York on Oct. 16, 2009 in what is being called the USA’s largest hedge fund insider-trading scheme. He is being accused of insider trading and securities fraud, generating as much as $49 million in profit. The majority of the stocks involved are in technology, including, IBM, Intel, Akamai Technologies Inc, Polycom Inc, Hilton Hotels Corp, Google Inc, Sun Microsystems Inc SUNW.TI, Clearwire Corp, Advanced Micro Devices, ATI Technologies Inc and eBay Inc.

Breakout Science Bloggers via Science Weekly

Mind Hacks by Vaughan Bell
Observations of a Nerd by Christie Wilcox
Neurotic Physiology by Scicurious
Science Seeker, an aggregator
Not Exactly Rocket Science by Ed Yong
Bad Astronomy by Phil Plait
The Loom by Carl Zimmer
Laelaps by Brian Switek
Frontal Cortex by Jonah Lehrer
Neuron Culture by David Dobbs
Superbug by Maryn McKenna
NeuroTribes by Steve Silberman
The Gleaming Retort by John Rennie
Science 3.0 by Mark Hahnel
John Hawks' Weblog
Thoughtomics by Lucas Brouwers
Krulwich Wonders by Robert Krulwich
A Blog Around the Clock by Bora Zivkovic
Scientific American blogs
The science comedian by Brian Malow

Chiesi Pleads Guilty Ahead Of Rajaratnam/Galleon Hedge Fund Trial

HedgeCo news - Danielle Chiesi has pleaded guilty at a plea proceeding in U. S. District Court located in New York. She was accused of receiving insider information from Robert Moffat, Jr., who also pleaded guilty in the Galleon hedge fund fraud scheme.

From August to October 2008, Moffat got insider information relating to IBM, Advanced Micro Devices, Inc. (AMD) and Lenovo Group Ltd. (Lenovo), providing the insider information to to Chiesi, hedge fund founder Raj Rajaratnam’s co-defendant. She worked for New Castle Partners, an equity hedge fund group affiliated with JPMorgan Chase & Co.

The court documents reveal that in September 2008, Moffat provided Chiesi with information relating to IBM’s and Lenovo’s performance in the companies’ respective fiscal quarters ending in September 2008.

Chiesi and Rajaratnam were arrested in October 2009. Her guilty plea comes a month before Rajaratnam goes on trial.

Hedge Fund Tax Alert: Reporting of ‘Specified Foreign Financial Assets

New York (HedgeCo.net) – U.S. taxpayers with ownership in foreign hedge funds, investments and assets may be affected by the Foreign Account Tax Compliance Act (“FATCA”), which was included as part of the 2010 Hiring Incentives to Restore Employment (“HIRE”) Act, according to hedge fund adviser Decosimo.

Hedge fund managers may need information on related costs and penalties associated with noncompliance.

A short summary of the key points are:

* WHO is subject: individuals (but may be expanded to entities by regulations).

* WHAT is subject: any “specified foreign financial asset” which includes foreign bank or securities, accounts, any stock or security issued by a non-US person, any financial instrument or contract held for investment where the issuer or counterparty is a non-US person and any interest in a foreign entity with total value of all accounts of $50,000 or more.

* WHEN is effective date: Tax filing year 2011 for most individuals.

* WHERE is this reported: Form 1040 package (specific form not yet drafted).

* WHY should taxpayers comply: potential penalties are substantial and statute of limitations may be involuntarily extended.

Full Alert Here: Reporting of ‘Specified Foreign Financial Assets’ (22KB)

Hedge Fund Fraud: iPod Leaking Executive Makes Bail

HedgeCo.net - Three of the research executives arrested by the FBI in December have been granted bail, including the man who allegedly leaked details about the iPad to a a hedge fund.

James Fleishman, from Primary Global Research, Mark A. Longoria, from Advanced Micro Devices, Walter Shimoon, from Flextronics International, and Manosha Karunatilaka from Taiwan Semiconductor Manufacturing, are accused of selling confidential information to hedge funds.

Along with travel restrictions, Reuters reports that Shimoon's bail was set at $150,000, Longoria's at $50,000 and Fleishman's bail was set at $700,000.

Hedge Fund Projects: Epic Louis Armstrong Bio

HedgeCo News - Good news for music lovers and art investors, film producers Oley Sassone and Bill Badalato are seeking hedge fund financing for a major motion picture based on the young life of Louis Armstrong, entitled Black & Blue.

Total budget for the project is $18 million. The film will be shot in New Orleans, where a 30% State tax credit is available. Musical bio pics such as Ray, Walk The Line, La vie En Rose, have been extremely successful at the box office (all have grossed over $100 million) and have won Academy Awards.

The investment proposal describes Black & Blue as, “A sometimes poignant, sometimes sad, sometimes humorous but always entertaining story of the young Louis Armstrong as he claws his way through the seamier side of New Orleans from childhood through adolescence to young adulthood on his path to becoming a jazz superstar – an icon in the entertainment industry.”

I’ll know more about the project soon, as Sassone is sending me the details as they develop. I’m a personal fan of both Armstrong and New Orleans, and am excited to play even a small part in the development of the film.

Oklahoma Hedge Fund Manager Sentenced To 10 Years

HedgeCo News - Former hedge fund manager, Mark S. Trimble, of Edmond, Oklahoma, was sentenced to serve 10 years in federal prison for money laundering.

Trimble, 44, pleaded guilty in April to money laundering. Trimble’s hedge fund, Phidippides Capital Management, was used to divert $1,000,000 of investor funds to his own account, the prosecution claimed. The judge also ordered Trimble to serve two years of supervised release following his prison term and pay $9,045,451.23 in restitution to investors.

The investigation was conducted by the FBI, the Criminal Investigative Division of the IRS, and the United States Secret Service.

Hedge Fund Alert: The New Tax Act

Holland & Knight Alert on the New Tax Act

Hedge fund law specialists, Holland & Knight said that the estate, gift and generation skipping transfer tax provisions of the new tax act are of major interest.

These changes will require every estate plan to be reviewed to make sure the best advantages are incorporated. Holland & Knight feels that there are significant planning opportunities still left for 2010.

Private Wealth Services Alert 12 20 10 (413KB)

Sadis & Goldberg on the Tax Relief Act of 2010

The Tax Code has been recently amended to extend what is commonly known as the “Bush Tax Cuts” that Congress enacted in 2001 (which by their original terms expired on December 31, 2010) will apply for another two years. The extension means that the income tax rates will now stay at 28% and 35%. Capital Gains tax rates will now stay at 15% and qualified dividends will continue to be taxed at 15%. The Alternative Minimum Tax exemption amount has been increased which will lower the number of taxpayers subject to this tax.

There are a number of tax breaks for businesses and individuals, such as the ability to make a tax free distribution of up to $100,000 from an IRA to a charity, and faster depreciation for businesses when property is placed into service.

Another major change is in the Federal Estate Tax law. The Federal Estate tax exemption will now be raised to $5,000,000, and the tax rate reduced from 55% to 35% for Federal Estate taxes. For estates of decedents dying in 2010, they can elect to have no estate taxes apply, and to have a modified basis carryover, instead of an estate tax imposed retroactively along with a step-up in basis. For example, if a married couple owns $10,000,000 in assets, with a properly planned estate, they would not be subject to any Federal Estate taxes. However, we must remind you that New York State has a separate estate tax imposed on estates over $1,000,000.

Prior to 2011, the Gift Tax Exemption was limited to $1,000,000. As of January 1, 2011, the gift tax exemption is increased to $5,000,000. Taxpayers should consider using their increased gift tax exemption over the next two years, as the lifetime exemption may decrease in the near future. There are a variety of estate planning techniques which can use the increased gift tax exemption. Additionally, the Generation Skipping Tax Exemption will be raised to $5,000,000.

5 Arrested In Insider Trading Probe

HedgeCo.net - Five research executives have been arrested by the FBI, James Fleishman, from Primary Global Research, Mark A. Longoria, from Advanced Micro Devices, Walter Shimoon, from Flextronics International, and Manosha Karunatilaka from Taiwan Semiconductor Manufacturing.

The Washington Post reports that the four men were accused of selling confidential information to hedge funds while the fifth man, Daniel Devore, formerly an executive with Dell, pleaded guilty to wire fraud and conspiracy to commit wire fraud and securities fraud.

“A corrupt network of insiders at some of the world’s leading technology companies served as so-called consultants who sold out their employers by stealing and then peddling their valuable inside information,” U.S. attorney Preet Bharara said in a statement, according to The Washington Post.

Summary of SEC Proposed Regulations Implementing Dodd-Frank’s Mandated Hedge Fund and Private Equity Fund Registration and Reporting Regime

Attached is a brief summary of the more than 400 pages of rule proposals recently released by the SEC pertaining to regulations implementing Dodd-Frank’s mandated hedge fund and private equity fund registration and reporting regime.

SEC Rule Proposals – Registration and Reporting (pdf 158KB)

The summary of the proposed rules covers which investments advisers will have to register with the SEC, which advisers will be exempt from registration with the SEC, and which advisers will have to register with the states rather than the SEC.

Also included is a reference to the timeline proposed by the SEC for implementation of the final rules, as well as remarks pertaining to an adviser’s own timeline for SEC registration, if necessary.

Hedge Funds Attract $61 Billion So Far In 2010

New York (HedgeCo.net) - Hedge funds attracted $61 billion over the first 10 months of 2010, according to the November 2010 Eurekahedge Report, taking the hedge fund industry to $1.63 trillion, above October 2008 level.

Hedge funds are up 7.33%# YTD October, ahead of global markets by 4.64%. The Eurekahedge Long/Short Equity Hedge Fund Index is up 29.8% over the last 24 months and assets in long/short equity funds crossed US$500 billion.

All regional mandates delivered positive returns, with the exception of Japanese managers, as global markets kept up the momentum built up in September. A strong corporate earnings season and expectations of further quantitative easing resulted in healthy movements in the underlying markets. Asia ex-Japan funds continued their strong run, coming out on top for the fourth consecutive month, with gains of 3.08% and all strategies ending the month in positive territory. Managers investing in China witnessed a second month of excellent returns, up 3.78%, taking their two-month gain to 10.33%. Chinese managers were helped by a strong run in the underlying equity markets – the Shanghai Composite rose 11.53% while the Hang Seng gained 3.30%.

Managers in developed markets also registered some strong gains, with the Eurekahedge North American Hedge Fund Index gaining 2.47% in October. The healthy corporate earnings environment and increased investor confidence resulted in favourable conditions for equity based strategies – the S&P 500 was up 3.69% for the month.

Strong launch activity was seen in the first three quarters, with more than 600 funds launched in 2010 so far.

Two Florida Hedge Fund Managers Accused In Petters Scheme

HedgeCo.net - The SEC has charged two Florida-based hedge fund managers and their funds with defrauding investors out of more than a billion dollars into a Ponzi scheme run Tom Petters, Reuters reports.

The SEC’s complaint filed in U.S. District Court for the District of Minnesota alleges that hedge fund managers Bruce Prévost and David Harrold, along with their firms Palm Beach Capital Management LP and Palm Beach Capital Management LLC invested more than $1 billion in hedge fund assets with Petters while pocketing more than $58 million in fees.

Petters promised investors that their money would be used to finance the purchase of vast amounts of consumer electronics by vendors who then re-sold the merchandise to such “Big Box” retailers as Wal-Mart and Costco. In reality, the “purchase order inventory financing” business was merely a Ponzi scheme. There were no inventory transactions.

Petters sold promissory notes to feeder funds like those controlled by Prévost, Harrold, and their firms, and Petters used some of the note proceeds to pay returns to earlier investors, diverting the rest of the cash to his own purposes.

Comments from the defense were not available at the time, the SEC is seeking a permanent injunction against the hedge funds and their managers, as well as disgorgement, including interest and financial penalties, the WSJ said.

Rajaratnam Challenges Wiretap Evidence

New York (HedgeCo.net) - Hedge fund founder Raj Rajaratnam is again seeking to throw out the evidence gained by the prosecution's wiretapping evidence.

"In applying for wiretap permission in March 2008, an FBI agent failed to tell a judge about prior lengthy probes of his client by securities regulators and the FBI." Rajaratnam's lawyer, John Dowd, told Monday's Manhattan federal court hearing, according to Reuters.

In Feburary, Dowd attacked the U.S. government’s wiretap evidence saying he would file a motion to suppress the telephone recordings which were used to arrest Rajaratnam and more than a dozen other people in the Galleon raid. Rajaratnam then won an emergency order relieving him from having to turn over wiretap recordings because of legal hurdles in obtaining the 14,000 wiretap intercepts.

"The recordings were cherry picked and mismanaged and someone did not do their homework." Dowd told the Judge in the Feb hearing.

The hedge fund millionaire was taken into custody in New York on Oct. 16, 2009 in what is being called the USA’s largest hedge fund insider-trading scheme. He and his co-defendant, Danielle Chiesi, face up to 20 years in prison if convicted on the charges.

World Habitat Day Today

HedgeCo Blogs - The United Nations has designated the first Monday in October as annual World Habitat Day. So on October 4, 2010 Habitat for Humanity (US) is echoing the United Nations’ theme for 2010: “Better City, Better Life” by focusing on neighborhood revitalization. Habitat is also releasing the 2011 Shelter Report, which focuses on the need for more research on the connections between homes and family health.

Habitat for Humanity-NYC is currently building a 41-unit affordable condominium building on Atlantic in Brooklyn made with environmentally-friendly materials. ”I can think of no better way to maximize our return-on-investment in human capital than by joining with Habitat for Humanity – New York City to build homes for families in need.” Stuart Feffer of Hedge Funds for Habitat NYC, said.

Habitat for Humanity Ireland is holding its first-ever Women Build in Romania from October 2-10. Fifteen women will travel to Romania to work with local families to build simple, decent, affordable homes. Global Habitat for Humanity offices have also organized local World Habitat Day events, click to find one in your area.

Barclays Wealth has hired fourteen new investment representatives

$232 billion hedge fund manager Barclays Wealth has hired fourteen new investment representatives in it US branch offices.

In Miami, Tony Esses joins as a Director and Investment Representative after 24 years at HSBC Private. Robert Sperber joins as a Director and Investment Representative from Morgan Stanley Smith Barney. Previously, Sperber was a financial advisor at UBS and Oppenheimer & Co. in New York. James Hafele, also joins Sperber’s team from Morgan Stanley Smith Barney.

In Palm Beach, Matthew Burton joins as a Vice President and Investment Representative from JP Morgan.

In Atlanta, Tom Pair joins Barclays Wealth as a Director and Investment Representative in Atlanta. John Nicholas joins as a Vice President and Investment Representative in Atlanta from Morgan Stanley Private Wealth Management. Forest Simmons joins as a Vice President and Investment Representative in Atlanta from BNY Mellon Wealth Management, where he worked for the past three years.

In New York, Ron Willis and John-Paul Tomassetti have joined as Directors and Investment Representatives. Rene Joliot, Edgar Ramirez and Romel Rodriguez have joined Barclays Wealth as Investment Representatives in New York from UBS International.

In Philadelphia, Gerhard van Arkel and Brett Thomas Meyers joined as Investment Representatives in from Wilmington Trust.

Finally, Barclays Wealth appointed Brian Sears as a Managing Director and Regional Manager for Los Angeles. Sears joins from Neuberger Berman in New York, where he was most recently Global Co-Head of Distribution for Alternative Investments. Prior to that, he spent 15 years as an investment advisor at Lehman Brothers, Merrill Lynch and Goldman Sachs.

Hedge Funds Provide Biofuel Company With Bridge Loan

New York - Hedge funds Third Point and Greenlight Capital have made a short-term loan of $19.4 million to BioFuel Energy Corp., in which they hold shares, MarketWatch reports.

With a 12.4% interest rate, a 4% fee and and repayments by March 24, 2011, the Securities and Exchange Commission reports that the bridge loan is secured by an equity stake in a BioFuel subsidiary.

The two hedge funds own 69% of BioFuel’s outstanding common shares combined, MaketWatch said. Third Point and Greenlight stand to make a large profit if BioFuel does not produce the payments.

With debts of $212 million, BioFuel has lost $57 million since 2007.

Hedge Funds To Get Tribune Out Of Bankruptcy

HedgeCo News - The Chicago Tribune and Los Angeles Times have made a deal with hedge funds Oaktree Capital Management and Angelo, Gordon & Co LP., which will give the two hedge funds significant stakes in the now bankrupt Tribune Co., according to a Reuters report.

Hedge fund Angelo, Gordon & Co., already holds stakes in the Philadelphia Inquirer and Minneapolis StarTribune.

The Tribune has been languishing in Chapter 11 bankruptcy since 2008, the deal would also would allow for Tribune to exit bankruptcy before resolving legal claims, Reuters said.

Awaiting bankruptcy court approval, Tribune said the two hedge funds hold a "significant" amount of the $6.6 billion in loans stemming from the first part of the two-step deal that put the previous owner in control.

"The mediator is confident that the proposed plan will lead to additional constructive discussions between and among the debtors and other parties," said a court filing from Kevin Gross, the Delaware bankruptcy judge who acted as mediator, according to the paper. The mediations are ongoing.

The Age Illusion: How the Wealthy are Redefining Their Retirement

New York (HedgeCo.net) Global hedge fund manager Barclays Wealth reports that retirement is being rejected by a new breed of wealthy workers – the 'Nevertirees' - who want to carry on working for as long as they are able.

Ledbury Research surveyed over 2,000 high net worth individuals, all of whom had over $1.5m/1m in investable assets, 200 had more than $15m/10m. Respondents came from 20 countries across Europe, North America, South America, Middle East and Asia Pacific.

Sixty percent of wealthy individuals polled in a global survey say that they plan to become a Nevertiree, shunning traditional retirement, instead continuing to work, start businesses and take on new projects in their later years.

The report, the 12th in the Barclays Wealth Insights series, is based on a survey of more than 2,000 high net worth individuals, who were asked to consider what retirement and later life means to them.

The findings show that the concept of nevertirement is expected to grow over the coming decades, with over 70% of respondents under the age of 45 saying that they will always be involved in some form of work.

In particular, 75% of U.S. respondents plan to work part time after they have stopped working permanently, seven percent more than the global average. Specifically, 32% plan to work between five and 20 hours per week in "retirement", and seven percent plan to work more than 20 hours per week, "simply reaching the normal age to retire" is not at all important in determining when they stop working.


Only 40% of U.S. high net worth individuals "completely agree" that they are "totally confident" in having enough money for retirement, with another 37% "slightly agreeing". Only 48% of U.S. high net worth individuals would completely classify themselves as financially secure.

When planning for retirement 35% of U.S. wealthy feel that the rate of tax they have to pay is predictable, compared to 58% of Latin American high net worth individuals and 73% of wealthy individuals in Switzerland.

Further, one in ten of the wealthiest surveyed do not agree that they have enough money for retirement (greater than $15m in investable assets). Among the global wealthy who are already retired, only 51% agree they are completely confident in having enough money for their retirement.

Hedge Fund Launch: Clareville Capital Partners LLP

HedgeCo News - Privately owned financial management company, ML Capital Asset Management, (ML Capital) announced that the first manager to launch on the Montlake UCTIS platform* will be Clareville Capital Partners LLP, the hedge fund founded by David Yarrow. The fund will commence trading on October 1, 2010.

"The UCITS revolution allows investors to access managers who can actively short stocks and hedge a portfolio, however managers with long and successful experience of running equity hedge funds are in short supply." John Lowry, Chairman of ML Capital said, "The Pegasus fund has been running for over a decade and has always been run in line with the UCITS principles, which is very comforting to our investors."

David Yarrow and Angus Donaldson will co-manage a UCITS compliant derivative of the 13-year-old Pegasus Fund, which employs a UK Long/Short equity strategy.

"Yarrow and Donaldson's investment style will appeal to a lot of our investors. Their strong performance in upwardly trending markets and excellent downside protection in perilous markets is demonstrated by their track record." Lowry said.

"The past 10 years have illustrated the limitations of traditional "long only" equity investing." Angus Donaldson added, "All investors should have the opportunity to protect themselves from market volatility by investing in regulated hedge funds. However, many of the managers who have launched alternative UCITS products have found that they have weak brand awareness outside of the hedge fund world. This applies not just to smaller boutiques but also some of the very largest hedge fund houses. "

*Domiciled in Ireland, the Montlake UCITS platform Plc, provides investment managers with a turnkey solution for launching UCITS funds under its umbrella structure.