Hedge funds

The saga of Samuel Israel continues, with the $450 million Bayou hedge fund swindler now being sent to federal medical prison forpsychiatric evaluation. U.S. White Plains District Court Judge Kenneth Karas has sent Israel to Butner North Carolina Federal Medical Center for a complete medical and psychological evaluation, which could take up to 90 days.

Few people know as much about mutual funds as Matthew P. Fink. For more than 40 years, Fink dedicated his career to serving the industry and its 88 million shareholders through his work for the Investment Company Institute, serving as its president from 1991 to 2004.

Of the 8,000 hedge funds in existence, as many as one-third will close their doors, Emmanuel Roman, head of GLG Partners predicted at a conference on hedge funds in London, Dow Jones Reports.

With losses mounting—the average hedge fund is down 10% this year—hedge fund investors are increasingly looking to head for the exits, and hedge funds are putting up barriers, Dow Jones reports.

WASHINGTON - Though the Federal Reserve Board's reputation is built on its management of monetary policy, Chairman Ben Bernanke said Wednesday that the role of banking supervision at the central bank needs to be revisited.

The Morningstar 1000 Hedge Fund Index declined 7.87% in September, its largest one-month decline since its inception in January 2003. In the third quarter, the index declined 13.17%.

More than ever, hedge funds are loading up on unusually high amounts of cash, a clear sign that the smart money is bearish on the market through the rest of the year, The Wall Street Journal reports.

Fidelity Investments' institutional wealth management arm is ratcheting up its pursuit of financial advisers and wealth managers who want to run their own shops.

The credit crisis fueled a substantial 33% increase in asset management mergers and acquisitions in the third quarter, compared to 3Q07, Jefferies Putnam Lovell announced Tuesday. There were 69 M&A deals across the globe, up from 52 a year earlier.

CHICAGO - When it comes to choosing derivative instruments, some portfolio managers still think the more complicated they are, the better.

Citing restrictions on short selling, credit and liquidity as drains on hedge funds in September, as many decided, instead, to sit on “significant cash balances,” Hennessee Group’s performance report for the month the average fund’s performance was the worst in a decade, with funds losing between 5% and 9%.

In response to scrutiny over its ratings of instruments tied to subprime mortgages, Fitch Ratings has increased its own scrutiny over fund of hedge fund managers, warning that many such funds may not be able to meet redemption requirements if their risks are not closely monitored.

Private equity firms Bain Capital Partners and Hellman & Friedman acquired Neuberger Berman Monday for $2.15 billion, with the two firms holding equal positions in Neuberger, the firm’s portfolio managers given a “significant stake” and the deal expected to close early next year.

Many hedge funds will have trouble retaining top managers next year, thanks to terrible market performance across the board and a reward system based on that performance, The Wall Street Journal reports. To retain talent, they will have to tap into profits. Otherwise, they will have to close shop.

Justin F. Ficken, a former broker with Prudential Securities, pled guilty before U.S. District Judge Patti B. Saris on Monday to deceptively market timing mutual funds for seven hedge funds between January 2001 and September 2003, earning himself and two other brokers a combined $6 million in commissions.

Among the largest hedge funds, 35% are in the red so far this year, Hedge Fund Research data shows, as reported by The Wall Street Journal. As a group, their assets are down 4.3%, and among all of the listings in Hedge Fund Research’s Fund Weighted Composite Index benchmark, they are down 0.75%. This is the first half-yearly decline in the index since the group started it in 1990.

Taking dead-aim at Middle America, Allstate Corp. has added guaranteed lifetime withdrawal benefits to its target funds.

In another sign of the difficulties facing the financial services industry, Camulos Capital has told its investors that if they keep nearly $2 billion with the $2.5 billion hedge fund for the next year, the fund will reduce its fee by 75 basis points to 1.25%, The Wall Street Journal reports. And if the fund makes money between Oct. 1 and the end of 2010, it will reduce its share of profits to 10%, rather than the standard 20%.

The number of affluent households in the United States has decreased, according to initial research from the annual Affluent Market Research Program by TNS, a marketing company based in New York.

To help develop its financial system, China is going to support the launch of additional hedge funds, the South China Morning Post reports. However, Bejing is not going to give them a free hand; the government promises to police the funds and offer governing oversight.