Hedge funds

The Alternative Investment Management Association, a hedge fund group headquartered in the U.K., is pushing for more transparency, in an effort to stave off regulation.

Some hedge fund customers are getting their money back by selling their shares on the secondary market, Dow Jones reports. Hedge funds see this as an alternative to locking up customers’ money through so-called “gates.”

Outflows from hedge funds soared to $74 billion in January, the second-highest level on record, according to TrimTabs.

Hedge funds were dogged by steep, albeit somewhat smaller, redemptions in January, HedgeFund.net reported. At positive 0.2%, performance also improved somewhat. Meanwhile, the Standard & Poor’s 500 Index dropped 8% in January.

Tiger 21, a networking group for high-net-worth and ultra-high-net-worth investors, reports that these investors reduced hedge fund weightings in their portfolios from 11% in 2007 to 2.8% in 2008.

Debra Ryan, the longtime girlfriend of Samuel Israel III, who was found guilty of swindling Bayou Management hedge fund investors out of more than $400 million, pled guilty Tuesday to aiding and abetting the Israel when he was a fugitive.

Reports that U.S. Sens. Carl Levin's and Charles Grassley's new bill on hedge fund regulation will force funds to publicize the names of clients are untrue, the senators said.

Fifty-five percent of the hedge funds in the U.S. are registered with the Securities and Exchange Commission, according to Hedge Fund Research.

The New Jersey Bureau of Securities has barred three former Merrill Lynch brokers for allegedly enabling Millennium Partners to place more than 25,000 market-timing trades. Further, the three—Christopher Chung, Kevin Brunnock and William Savino— must pay $1.15 million in civil penalties.

Calls for greater oversight of the investment advisory profession continued last week, with key congressional leaders pushing the industry to come up with changes designed to prevent future fraud schemes similar to that of the Madoff case.

The Senate Thursday introduced the Hedge Fund Transparency Act of 2009, which, most notably, would require hedge funds to register with the Securities and Exchange Commission. It would also require them to adopt anti-money laundering programs.“There wasn’t much of an appetite for this sort of legislation before the financial crisis,” said one of the bill’s sponsors, Sen. Charles Grassley (R-Iowa). “A major cause of the current crisis is a lack of transparency. The wizards of Wall Street figured out a million clever ways to avoid the transparency sought by the securities regulations adopted during the 1930s. Instead of the free flow of reliable information that markets need to function properly, today we have confusion and uncertainty fueling an economic crisis.”The bill is an amended version of a similar one that Grassley introduced in 2007.

Hedge fund Duff Capital Advisors has laid off approximately 80% of its staff, mostly form its investment teams, Dow Jones reports.

Investors withdrew $399 billion from hedge funds, or about 20% of assets, in 2008, according to data from Hennessee Group. On top of an average 18.3% market decline, or $382 billion in investment losses, the total $781 billion hit that hedge funds took was severe.

RAB Capital reported its assets under management were $1.9 billion as of Dec. 31, down 76% from $7.2 billion a year earlier. This includes $570 million in lock-ups.

The events that occurred in the financial services industry over the past year were once thought inconceivable. At this point, regulators are chomping at the bit to reverse how Wall Street does business, and investors are downright spooked. The editors of SourceMedia's business publications offer their views on how these dramatic shifts on Wall Street and in corporate America will impact businesses and investors this year.

The days when millionaire investors scrambled to get into a hot hedge fund are over, at least for now, Reuters reports. Skittish about the steep losses hedge funds experienced in 2008, investors are hesitant to put new money in hedge funds.

The tools that have worked so well for hedge funds in recent years—shorting and sophisticated trading models—worked beautifully up until last year, when hedge funds had their worst year on record.

Hedge fund managers have been beating mutual fund managers at scooping up initial public offerings in recent years, but given the weak performance of and loss of assets at hedge funds, their competitive advantage may be waning, The Wall Street Journal reports.

Hedge funds lost an average of 18.4% in 2008, according to early projections by the Hennessee Group. However, given that the Standard & Poor’s 500 Index declined 37% in 2008, hedge funds “significantly outperformed equity benchmarks on a relative basis,” said Hennessee Managing Principal Lee Hennessee.

Renaissance Institutional Futures, a $3 billion hedge fund run by James Simons, is foregoing management fees for 2009 as a response to poor performance in 2008.