Hedge Funds, No Thanks!--The hedge fund apocalypse is here!

The 4 Hedge Fund Horsemen
The 4 Hedge Fund Horsemen | Source
Steven Cohen
Steven Cohen | Source

Hedge Funds? No thanks! 3-1-07

We're hearing a lot about hedge funds these days. Last year SEC Chairman Donaldson, former CEO of Donaldson, Lufkin, Jenrette advocated minimal regulations for hedge funds. This year, SEC Chairman Cox and Treasurer Henry Paulson have decided the public interest would not be served by subjecting hedge funds to federal oversight despite the fact that the pension funds of many ordinary Americans are increasingly being invested in hedge funds.

So far as I've been able to determine there is no accurate measure of hedge fund performance because of the absence of reporting requirements and because the performance of the unsuccessful ones that are dissolved and disappear are not included in the statistics that are available. Hedge funds offer the promise of higher than market returns at the price of higher than market risk. The typical management fees are 2% of the funds invested plus 20 percent of the profits. The managers, however, don't suffer any of the losses. Losses come out of the investors' hides. This fee arrangement provides and incentive for hedge fund managers to put investors' money into high risk ventures in order to maximize their return. It also provides an incentive for trading on insider information not available to the ordinary investor. This set-up is a recipe for disaster for ordinary folks. Of course ordinary folks aren't allowed to invest in hedge funds except vicariously with their pension money. Anyway, by now you correctly get the idea that I'm not an advocate of hedge funds.

Here is a link to a Slate article on hedge funds by Daniel Gross.

http://www.slate.com/id/2159584/fr/flyout


2-6-13 Wall Street Journal--SAC Portfolio Manager Convicted of Insider Trading!

Former SAC Portfolio Manager Martoma Convicted of Insider Trading

A jury found former SAC Capital Advisors portfolio manager Mathew Martoma guilty of insider trading, a verdict that burnishes prosecutors’ trial record in such cases in recent years but doesn’t directly affect the firm’s founder, Steven A. Cohen.

Mr. Martoma was convicted of taking part in what prosecutors say was one of the largest insider-trading schemes ever—illegal trades on two pharmaceutical companies that helped SAC and its traders book profits and avoid losses worth a total of $276 million.

"The Prison Barber Shop," by B . Gillam from Puck magazine, July 8, 1885
"The Prison Barber Shop," by B . Gillam from Puck magazine, July 8, 1885 | Source

Some Hedge Funds Fudge their Valuations in Quarterly Reports to SEC and to Hedge Fund Data Base Providers

The Wall Street Journal reported on December 30, 2011 on academic studies using statistical analyses which show that some hedge funds' quarterly reports to the SEC on the valuations of the securities in their portfolios are over-stated or under-stated by as much as 10 percent. 'The economists say the results...suggest hedge funds "take advantage of lax regulation by strategically fudging equity position valuations to impress existing or potential clients.'"...The researchers found that the hedge funds whose holdings exhibited the widest discrepancies were more likely to report smoother monthly returns to hedge fund data base providers than were funds who reported accurate valuations to the SEC.

The WSJ article ended up with the question that if there are significant deviations in the reported prices of listed securities, what would a study show about reported prices of harder-to-value holdings such as derivatives, or thinly traded complex bonds.

Some Good Advice for Ordinary Investors

12-12-08 NY Times--Ron Lieber and Tara Siegel Bernard offer some good advice for investors.

5 PERCENT--Any investment has at least a remote possibility of going to zero or close to it. But when you're dealing with hedge funds and other exotic fare, the risks can be bigger, for reasons like leverage and strategy and lying and stealing.

HUMILITY--Investing, in general, requires humility. Few people have enough of it. It is the reason so few people put most of their money in index funds which track various asset classes rather than trying to pick winners. One problem with hedge funds is that they appeal to all the wrong instincts. They are for the privileged. Investors need to have a minimum net worth to qualify. In case of the money managed by Madoff many people seemed to have gotten in by belonging to the right country club. All too often rich individuals make easy marks because the pitch is, "You're special, you can get something that other people can't get."

But you probably aren't special--You probably are hearing about the second or third or fourth tier ideas in the world of alternative investments. Be honest with yourself: If you are in on them, how special could they really be, given the enormous demand for truly unique investment opportunities.

SMARTS--You may be rich and you may be smart. But smart about this sort of investing? Not so much.

RESEARCH--Dong your homework on a sophisticated investment opportunity is not easy. Your financial planner may not have the time or the skills to do a thorough investigation either.

SECRETS--One hard part about investing in hedge funds is that some of the most successful ones will not say much about how they work. If they disclose too much about their tactics, others will copy them and their investors will be hurt.

http://www.nytimes.com/2008/12/13/business/yourmoney/13money.html?_r=1&ref=business

Robert Moffat, IBM senior VP arrested
Robert Moffat, IBM senior VP arrested

1-29-09 JP Morgan Chase sued for putting clients into Madoff funds

 JPMorgan Chase is under the gun of lawsuits from European clients who were put into hedge funds that invested their money in accounts managed by Bernie Madoff. The European clients lost $50 million and are claiming JPMorgan Chase failed to do due dilligence on their investments with Maddoff. And, worse, they are claiming that JP Morgan Chase, based on inside information not disclosed to its clients, pulled it's own money out of Madoff shortly before the shit hit the fan, so to speak. Here's a link to an article in today's NYTimes.

http://www.nytimes.com/2009/01/29/business/29madoff.html?ref=business

Fraud Down on the Bayou

 

4-15-08 Hedge Fund Founder Sentenced to 20 YearsA federal district judge sentenced Samuel Israel III, co-founder of a hedge fund, the Bayou Group, now defunct, to 20 years in prison on Monday for his role in a cheme that cheated investors out of more than $400 million.http://www.nytimes.com/2008/04/15/business/15bayou.html?scp=1&sq=Samuel+Israel+III&st=nyt



Bird and Fortune--Where has the money gone?

More by this Author


71 comments

Iðunn 9 years ago

http://news.yahoo.com/s/ap/20070301/ap_on_bi_ge/se...

"Husband and wife lawyers and 11 top Wall Street workers were charged Thursday with making more than $15 million in illegal trading profit through an alleged federal securities fraud scheme, authorities said.... Besides the lawyers, defendants including registered representatives, compliance personnel and hedge fund portfolio managers, improperly relied on hundreds of tips during five years of illegal trading, she said."


Iðunn 9 years ago

weird coincidence that I just read something on your hedge funds in the news (quote above)


Ralph Deeds profile image

Ralph Deeds 9 years ago Author

Thanks for the comment. We're on the same page.


Iðunn 9 years ago

more on the hedge fundz, latest:

Hedge funds hit hard by subprime woes

http://money.cnn.com/2007/03/16/markets/hedge_subp...

The limited partnership investment funds are much more exposed to the high-risk loans than mutual funds.March 16 2007 


worldwidesekar 8 years ago

Good information about hedge funds. Like http://www.opaleseque.com


Ralph Deeds profile image

Ralph Deeds 8 years ago Author

Tnx for you comment.


Ralph Deeds profile image

Ralph Deeds 7 years ago Author

A shakeout in the hedge fund industry is under way!


Ralph Deeds profile image

Ralph Deeds 7 years ago Author

I can't resist saying I told you so. This hub was first published 3-1-07.


Misha profile image

Misha 7 years ago from DC Area

That was a good call Ralph! You have all the bragging rights :)


JamaGenee profile image

JamaGenee 7 years ago from Central Oklahoma

Great call, Ralph! I've long thought the non-wealthy, the Average Joes, have more common sense about money than those who have more than they know what to do with. To us at the bottom of the pile, it's M-O-N-E-Y, a finite amount we need to keep a roof over our heads and food on the table. For the super-rich, it becomes simply a THING to be moved around to avoid taxes or to make *more* money. Easy pickings for unscrupulous people like those in the news items above.


countrywomen profile image

countrywomen 7 years ago from Washington, USA

Ralph- I believe Madoff promised 10% interest rate without investing in a safe high yielding areas. It is sad when many hard working people lose their life's saving. I have all my savings in a bank account and my company based 401k I don't even know how much it is worth so far. I guess just being busy working I never paid attention to these things. I will have to pay more attention to my finances now. Thanks for reminding me. Btw Happy New Year and I like your new wise man look. The national animal of India(tiger) look was a little intimidating and now I feel much more comfortable talking to your present avatar...hehe


Ralph Deeds profile image

Ralph Deeds 7 years ago Author

Thanks for the comments. Here's some additional information on investing in mutual funds:

http://hubpages.com/money/How-to-Invest-Money-in-M...

http://hubpages.com/money/How-to-invest-in-foreign...

Unless you have a defined benefit pension, you should be saving and investing no less than 15% of your earnings every year. Otherwise, as I've warned my children, you'll end up at age 70 living in a tenement in a bad neighborhood, sitting on a broken down bed, in your pee-stained underwear, with a bare light bulb hanging down from the ceiling and a bottle of Ripple on the floor.


countrywomen profile image

countrywomen 7 years ago from Washington, USA

Ralph- Thanks for those links and I will check them out soon. Hope everything is going smoothly at your end. Happy New Year.


Ralph Deeds profile image

Ralph Deeds 7 years ago Author

JPMorganChase implicated in Madoff ponzi scam.


Ralph Deeds profile image

Ralph Deeds 6 years ago Author

Hedge fund founder/executive of Galleon Group is charged with an illegal insider trading scheme which netted him $20 million. His bail was set at $100 million because he was deemed a flight risk.

Others charged by prosecutors include Mark Kurland, the president of New Castle Partners, another large money manager; Danielle Chiesi, a former Bear Stearns executive who now works at New Castle; Rajiv Goel, an executive at Intel’s treasury department who supported the company’s venture capital arm; Anil Kumar, an executive at McKinsey & Company; and Robert Moffatt, an executive at I.B.M.

10-16-09 NY Times article here

http://dealbook.blogs.nytimes.com/2009/10/16/hedge...


Ralph Deeds profile image

Ralph Deeds 6 years ago Author

News of Mr. Rajaratnam’s arrest has also shaken the secretive hedge fund world, in which intelligence on companies is often shared among Wall Street analysts, traders and other investors. To gain an edge, hedge funds use lobbyists, private investigators and other connected people to dig for information about a company or industry.

While most of the information is obtained legally, the government’s use of wiretapping and confidential witnesses in the Galleon case raises questions about when investors can act on information that is not public. The case also signals a new zeal by regulators and law enforcement officials to clamp down on Wall Street crime after failing to detect the $68 billion Ponzi scheme run by Bernard L. Madoff. NYTimes 10-17-09


ledefensetech profile image

ledefensetech 6 years ago from Cape Girardeau, MO

Smart people in the know have avoided hedge funds for years. Only people who gamble their money, rather than play the market got taken in. It's sad but if you don't know what you're doing, you shouldn't risk your money. People are much more apt to take risks with your money than their own. Ben Franklin said it best when he said "Neither a lender nor a borrower be".


Ralph Deeds profile image

Ralph Deeds 6 years ago Author

I agree completely. However, we need enforcement of effective rules against Ponzi schemes, insider trading, front running, trading after the market is closed, etc.


Ralph Deeds profile image

Ralph Deeds 6 years ago Author

Raj Rajaratnam, the authorities say, masterminded one of the biggest insider-trading schemes in a generation.

Skip to next paragraph

Daniel Acker/Bloomberg News

Raj Rajaratnam leaving federal court last Friday.

Related

Thin Line Separates Insider Trading and Research (October 20, 2009)

Times Topics: Raj Rajaratnam

But if Mr. Rajaratnam was trading on insider information, apparently he was not very good at it.

A close examination of the trades that led to his arrest last week reveals a startling fact: In all, Mr. Rajaratnam lost millions from what prosecutors characterize as illegal trading. NYTImes 10-21-09


Ralph Deeds profile image

Ralph Deeds 6 years ago Author

The latest hedge fund insider trading scandal involving insider trading by Raj Rajaratnam's Galleon Group exposes the seamy side of Wall Street and doesn't inspire confidence in the financial industry's treatment of ordinary investors. The line behind insider trading and investment analysis and research is a thin one. Too often the individual investor is at the bottom of the investing food chain, the last to get the bad news or the good news about his stocks. The "big boys" bail out before he gets the bad news and buy before he gets the good news. The SEC faces a near impossible task in enforcing the laws against insider trading.

http://www.nytimes.com/2009/10/22/business/22insid...


ledefensetech profile image

ledefensetech 6 years ago from Cape Girardeau, MO

Again, you don't ever talk about how you keep the enforcers from being co-opted by the very people they are to oversee. Look at the SEC. They did nothing about Enron and Arthur Anderson. Industry journals were all talking about the "creative" bookkeeping Enron was doing, but there wasn't a peep from the SEC, at least not until the company unraveled and all those people lost out. Your average investor shouldn't be investing. Especially in an unsustainable boom caused by the Clinton administration's loose monetary policy. Joe Schmoe always gets hammered in situations like that.


Ralph Deeds profile image

Ralph Deeds 6 years ago Author

I have talked about how the regulatory agencies have been co-opted by the industries they are supposed to be regulating.

"the Clinton administration's loose monetary policy."??? My recollection is that libertarian, Ayn Randian, Alan Greenspan, appointed by Bush I, reappointed by Clinton and Bush II, was responsible for the loose monetary policy and bubble in the Bush administration and in large part, among others, to blame for the crash. It hadn't gotten out of hand in the Clinton administration.

I'm not a fan of hedge funds or the conflicts of interest between stock brokers and mutual funds and their customers.

What's your solution? Give up efforts by the government to regulate banks, drug companies, airline safety, and so forth? Regulators do a much better job during Democratic administrations than Republican administrations. Bush let the mining, oil, electric power, pharmaceutical and insurance industries write their own tickets.


ledefensetech profile image

ledefensetech 6 years ago from Cape Girardeau, MO

Sure, Greenspan was a Randian when he took over, but his subsequent policies were anything but Randian. That's what we call saying one thing and doing quite another. It's how you tell the measure of a person. Greenspan failed. Actually Bush I didn't do a thing, he wanted to ride the recession out, knowing that it would end. That's what gave Billy Clinton his opening to the Presidency.

Hadn't gotten out of hand in the Clinton administration? By 1999 the stock market was way overvalued, Peter Schiff said he was amazed at the number of people who refused to invest in foreign markets in 1998 and 1999 because they wanted a slice of the NASDAQ. Which is why he's in business and most of the people who refused him wound up in the poorhouse.

Really? Tell that to GE. Seems to me the Obama administration is giving them a sweet deal. So much so their network, NBC isn't even bothering to do any real investigating on the President, his cabinet and his kitchen cabinet.

Corporations only get away with the things they do because they co-opt government and government co-opts them. Look at how Goldman used the Treasury to take down rivals and look how the Treasury used Goldman to exert unprecedented control over the nation's banking industry. That pic you posted on your other hub is more true than you realize.


Ralph Deeds profile image

Ralph Deeds 6 years ago Author

Blaming Clinton for a crash that occurred nearly eight years after he left office is a bit of a stretch, don't you think? Now you guys are blaming Obama for Bush's follies when he's been in office only eight months. Come on, fair is fair!

Ledefense tech, I'm tired of your patronizing tone: "more true than you realize." You have no idea "what I realize." Why not just stick to the issues and skip the speculation about "what I realize."


Ralph Deeds profile image

Ralph Deeds 6 years ago Author

It seems to me that the definition of insider information is somewhat fuzzy. As an individual investor I often feel as if I'm at the bottom of the food chain. The last to get the good news and bad news. Scandals revealed in the past few years have not been reassuring--conflicts between mutual funds and their investors, Enron, apparently widespread re-valuing and backdating of stock options and other shenanigans involving, as Pearson Hunt used to say, O.P.M., drug companies bribing medical school professors, and so forth. Perhaps these conflicts have always been there, but I don't recall so many scandals in nearly 50 years of investing.


Ralph Deeds profile image

Ralph Deeds 6 years ago Author

October 30, 2009, 1:47 pm

I.B.M. Executive in Insider-Trading Case Departs

By Steve Lohr

I.B.M. is getting a little more distance from the Galleon insider-trading case that broke this month.

The company posted a brief message this morning on its internal Web site. “Bob Moffat, who had been placed on a leave of absence as a result of a U.S. federal investigation into his personal activities, is no longer an employee of I.B.M.,” it said.

Robert W. Moffat Jr. was a longtime I.B.M. manager, who rose to become a senior vice president for the company in charge of its systems and technology group — chip manufacturing and server computers.

In the federal indictment, Mr. Moffat was accused of passing along delicate company information about I.B.M.’s earnings and the plans of a chip-making partner, Advanced Micro Devices, to a hedge fund broker. Mr. Moffat, through his lawyer, has denied any wrongdoing.


Ralph Deeds profile image

Ralph Deeds 6 years ago Author

More inside traders caught in SEC investigation as number charged rises to 14.


Ralph Deeds profile image

Ralph Deeds 6 years ago Author

"I think there are some libertarians who think we should allow it," says Wharton finance professor Jeremy J. Siegel. "But I think insider trading is not a good thing. It makes it more risky to buy securities. When someone is offering to buy or sell, it might be that he or she has some inside information and you are going to get duped. So you cannot trust that you are going to get a fair price." Put simply, insider trading means other investors pay more than they should when they buy and get less than they should when they sell.


Ralph Deeds profile image

Ralph Deeds 6 years ago Author

A former executive of Intel admitted in court on Monday that he had leaked confidential corporate information to his close friend Raj Rajaratnam, the founder of the Galleon Group hedge fund. He adds to a list of cooperating witnesses that federal prosecutors are using to build a case in a wide-ranging insider-trading scandal.

Rajiv Goel, formerly of Intel, said he had leaked inside information to Raj Rajaratnam.

Add to Portfolio

The executive, Rajiv Goel, said at a court hearing that his friendship with Mr. Rajaratnam began 25 years ago when the two attended the Wharton School at the University of Pennsylvania.

Mr. Goel said he provided Mr. Rajaratnam in 2007 with inside information about Intel’s financial condition before it was publicly released. He also tipped Galleon’s founder about a pending joint venture between the Clearwire Corporation and Sprint Nextel, a deal in which the chip maker Intel planned to invest $1 billion. Mr. Goel was a managing director in Intel’s treasury department until he left the company in late January.


Ralph Deeds profile image

Ralph Deeds 6 years ago Author

A former executive at McKinsey & Company agreed Monday to pay $2.8 million to settle civil charges filed by the Securities and Exchange Commission, after he pleaded guilty to criminal fraud charges related to the Galleon Group insider trading case. NYTimes 5-18-10


Ralph Deeds profile image

Ralph Deeds 5 years ago Author

Harbinger Hedge Fund in Cash Bind?

But even as his satellite orbits overhead, Mr. Falcone seems to be losing altitude. Federal authorities are examining whether he used his giant hedge fund as a personal piggy bank to pay a personal income tax bill. They are also investigating whether his money management firm, Harbinger Capital Partners, gave preferential treatment to certain clients.

Alarmed by the investigations and uneasy about Mr. Falcone’s 4G ambitions, investors like Goldman Sachs, the Blackstone Group and New York State’s public pension fund have asked to withdraw money from Harbinger.

Meanwhile, Mr. Falcone has been selling investments. He has unloaded stakes in Citigroup and The New York Times Company and a $650 million investment in Inmarsat, a British satellite company.

All of this has led to speculation in the hedge fund community that Mr. Falcone and his firm are confronting a cash squeeze. If more investors withdraw money, the whispers go, Mr. Falcone could be in trouble.

http://www.nytimes.com/2010/12/02/business/02hedge...


Ralph Deeds profile image

Ralph Deeds 5 years ago Author

FrontPoint folds most hedge funds following insider trading investigation.

"FrontPoint Partners, once a multibillion-dollar hedge fund before it was battered by allegations of insider trading, will shut down most of its funds by the end of the month." NY Times 5-20-11


Ralph Deeds profile image

Ralph Deeds 5 years ago Author

GOP Senator Grassley investigating insider trading at SAC Capital Advisors.

http://dealbook.nytimes.com/2011/05/21/grassley-in...


Ralph Deeds profile image

Ralph Deeds 5 years ago Author

Another insider trading conviction:

Winifred Jiau, 43, was charged, tried and convicted in less than eight months, and now faces up to 25 years in prison when she is sentenced in September.The jury foreman, Susan Kohlmeyer, an educator from Westchester County in New York, expressed dismay about corruption in the world of finance.

“I was despairing when I heard from those witnesses about what goes on in the system,” she told reporters outside the courthouse, according to news wire reports. “I hope that hedge funds will be re-examined, because there’s a lot of corruption.”

Ms. Jiau was one of just five insider trading defendants to fight the government’s charges this year. All have been found guilty.

NY Times 6-20-11


Ralph Deeds profile image

Ralph Deeds 4 years ago Author

The S.E.C has been investigating whether Harbinger agreed in 2009 to allow Goldman to withdraw up to $50 million from the firm, while not striking similar deals with other clients, according to people with knowledge of the investigation who were not authorized to talk publicly. At the time, Harbinger had limited investors from redeeming their assets because of the market turmoil during the financial crisis. Before joining Harbinger, Mr. Asali was co-head of Goldman’s hedge fund strategy group, helping to steer client investments to outside managers, including Harbinger.

http://dealbook.nytimes.com/2011/12/09/s-e-c-exami...


Ralph Deeds profile image

Ralph Deeds 4 years ago Author

Some Hedge Funds Fudge their Valuations in Quarterly Reports to SEC and to Hedge Fund Data Base Providers

The Wall Street Journal reported on December 30, 2011 on academic studies using statistical analyses which show that some hedge funds' quarterly reports to the SEC on the valuations of the securities in their portfolios are over-stated or under-stated by as much as 10 percent. 'The economists say the results...suggest hedge funds "take advantage of lax regulation by strategically fudging equity position valuations to impress existing or potential clients.'"...The researchers found that the hedge funds whose holdings exhibited the widest discrepancies were more likely to report smoother monthly returns to hedge fund data base providers than were funds who reported accurate valuations to the SEC.

The WSJ article ended up with the question that if there are significant deviations in the reported prices of listed securities, what would a study show about reported prices of harder-to-value holdings such as derivatives, or thinly traded complex bonds.


Ralph Deeds profile image

Ralph Deeds 4 years ago Author

U.S. Charges 7 for Insider Trading of Dell Stock - NYTimes.com

Federal prosecutors depicted a "circle of friends," including Anthony Chiasson of Level Global, who together earned about $62 million in illegal gains in Dell stock.

[Insider trading is rampant on Wall Street, in my opinion.]


Ralph Deeds profile image

Ralph Deeds 4 years ago Author

Whitman Capital Founder Is Charged With Insider Trading - NYTimes.com

Douglas F. Whitman, the founder of Whitman Capital, surrendered to the F.B.I. on charges of illegal trading in tech stocks using tips from people in the Galleon Group fraud.


Ralph Deeds profile image

Ralph Deeds 4 years ago Author

2-16-11NYTimes--Hedge Fund Operator, Philip Falcone, Losing Big Bet on LightSquared

Loss of Wireless Dream Caps Philip Falcone's Fast Fall From Grace - NYTimes.com

The F.C.C.'s rejection of LightSquared's broadband plan could spell disaster for the hedge fund manager Philip A. Falcone, who has spent billions of dollars on the project.


Ralph Deeds profile image

Ralph Deeds 4 years ago Author

1-17-12NYTimes--Tech Research "Analyst" Accused of Selling Insider Information to Hedge Funds

Tech Analyst Arrested in Insider Trading Crackdown - NYTimes.com

John Kinnucan, a technology analyst who gained notoriety last year for openly challenging federal authorities, was arrested on Thursday night, accused of selling inside information to hedge funds.


Ralph Deeds profile image

Ralph Deeds 4 years ago Author

6-25-12NYTimes--J. Ezra Merkin Revealed as Another Hedge Fund Malefactor

Hedge Fund Manager Merkin to Pay $405 Million in Madoff Settlement - NYTimes.com

J. Ezra Merkin, whose funds lost about $1.2 billion when Mr. Madoff’s fraud collapsed in 2008, has agreed to pay $405 million over three years to compensate his investors.


Ralph Deeds profile image

Ralph Deeds 4 years ago Author

http://dealbook.nytimes.com/2012/06/26/s-e-c-said-...

S.E.C. Said to Be Poised to Sue Fund Manager - NYTimes.com

Philip A. Falcone, the hedge fund manager, will fight any charges filed against him, his lawyer said. The S.E.C. has been looking at a $113 million personal loan Mr. Falcone made to himself from his fund and favoritism to Goldman Sachs, allowing withdrawals not available to other investors.


Ralph Deeds profile image

Ralph Deeds 4 years ago Author

7-1-12NYTimes Book Review: Hedge Fund Ancestor: Ferdinand Ward

‘A Disposition to Be Rich,’ by Geoffrey C. Ward - NYTimes.com

Geoffrey C. Ward’s great-grandfather, who ran a pyramid scheme, was the Bernie Madoff of the 1880s...."The young man sensed something in the culture. In this era of Wall Street’s flowering, people believed that money could be conjured from the air."


Ralph Deeds profile image

Ralph Deeds 4 years ago Author

7-2-12NYTimes Deal Book--In the Caymans its easy to find hedge fund directors

Hedge Fund Directors for Hire

As a result, dozens of operations have sprouted up on the Caymans to supply directors, from one-man bucket shops to powerhouse law firms. Directors are often Cayman-based professionals: accountants, lawyers and administrators of hedge funds.


Ralph Deeds profile image

Ralph Deeds 4 years ago Author

7-16-12NYTimes--Hedge Funds Given an Edge--Advance notice of analysts changes in ratings of individual stocks

Hedge Funds Tap Into Early Views of Stock Analysts - NYTimes.com

Polling analysts on their outlooks for a given company has become a way for large Wall Street firms to discover trading advantages from information that might not be public yet. The game is rigged against the individual investor!


Ralph Deeds profile image

Ralph Deeds 3 years ago Author

11-26-12NYTimes--"New Breed of SAC Capital Hire Is at Center of Insider Trading Case"

New Breed of SAC Capital Hire Is at Center of Insider Trading Case - NYTimes.com

Mathew Martoma's arrest signals the first time that prosecutors have linked Steven A. Cohen, the founder of SAC Capital Advisors, to possibly illegal trading activity.


Ralph Deeds profile image

Ralph Deeds 3 years ago Author

12-6-12NYTimes--How Insider Inquiry's Trail Led to Hedge Fund

Trail to a Hedge Fund, From a Cluster of Cases - NYTimes.com

Federal investigators have charged many former employees of SAC Capital Advisors, the hedge fund run by Steven A. Cohen, with trading on insider information.


Ralph Deeds profile image

Ralph Deeds 3 years ago Author

12-13-12NYTimes Dealbook "A Longstanding Wall Street Custom of Favoring Performance Over Ethics" by Jesse Eisinger

When Wall Street Investors Favor Performance Over Ethics - NYTimes.com

Another former employee of SAC Capital Advisors has been accused of insider trading, but the author says investors don't seem to mind, as they continue to put new money into the hedge fund in search of great returns.


Ralph Deeds profile image

Ralph Deeds 3 years ago Author

12-13-12NYTimes "Tiger Asia Admits Improper Trading and Calls it Quits" by Peter Lattman

Amid Insider Trading Inquiry, Tiger Asia Calls It Quits - NYTimes.com

Tiger Asia, a spinoff of Julian Robertson's Tiger Management, says it will return investor money, as it continues to face an insider trading investigation by authorities in Hong Kong.


Ralph Deeds profile image

Ralph Deeds 3 years ago Author

12-16-12NYTimes "The Double Life of U of M Medical School Professor Sid Gilman"

Sidney Gilman’s Shift Led to Insider Trading Case - NYTimes.com

While he appeared a grandfatherly academic, Dr. Sidney Gilman advised a network of Wall Street traders through SAC Capital and eventually crossed the line into criminal behavior.


Ralph Deeds profile image

Ralph Deeds 3 years ago Author

12-18-12NYtimes--Crook Alert!! Two Hedge Fund Operators Found Guilty of Insider Trading

"A Tight Knit Circle of Greed"

Anthony Chiasson, co-founder of Level Global Investors, and Todd Newman, former mgr at Diamondback Capital Management, were found guilty of a conspiracy that made more than $70 million illegally trading tech stocks. 6 others pleaded guilty.


Ralph Deeds profile image

Ralph Deeds 3 years ago Author

1-22-13NYTimes--Rajat Gupta, Former Goldman Sachs Director, Seeks Reversal of Insider Trading Conviction,

Rajat Gupta Seeks Reversal of Insider Trading Conviction - NYTimes.com

Lawyers for Rajat Gupta, a former Goldman Sachs director, have made several arguments on appeal. Among the most significant is that the government should not have been allowed to use certain wiretap evidence during his trial.


Ralph Deeds profile image

Ralph Deeds 3 years ago Author

1-21-13BloombergBusinessWeek "On the Trail of SAC Capital's Steven Cohen"

On the Trail of SAC Capital's Steven Cohen - Businessweek

30% per year return appears to be too good to be true, and it apparently was too good to be true. FBI, SEC and Justice Department trying to nail billionaire Steven Cohen.


Ralph Deeds profile image

Ralph Deeds 3 years ago Author

1-24-12WallStreetJournal--2 Years in the Slammer for Hedge Fund Operator Doug Whitman

Professional Article Snippet - WSJ.com

California Hedge Fund Manager Doug Whitman Found Guilty in Manhattan Federal Court on All Counts for Insider Trading Whitman Convicted on Four Counts for Trading on Marvell, Polycom, and Google Inside Information, Earning His Firm More Than $900,00.


Ralph Deeds profile image

Ralph Deeds 3 years ago Author

3-11-13NYTimes--Hedge Fund Operator, Florian Homm, Found and Jailed

Hedge Fund Manager Found and Jailed in Fraud - NYTimes.com

Florian Homm, who spent five years in hiding, was arrested in Italy and faces extradition to America, where authorities have accused him of defrauding investors of at least $200 million.


Ralph Deeds profile image

Ralph Deeds 3 years ago Author

3-15-12NYTimes "SAC Settles Insider Trading Cases for $616 Million"

SAC Capital to Pay $616 Million in Insider Trading Cases - NYTimes.com

Two affiliates of the giant hedge fund have settled insider trading cases with the S.E.C., for $616 million, in what the agency said was the biggest ever settlement for such cases. No criminal convictions yet.


Ralph Deeds profile image

Ralph Deeds 3 years ago Author

3-16-13NYTimes DealBook--SAC No Longer Cooperating in Insider Trading Investigation

SAC Starts to Balk Over Insider Trading Inquiry - NYTimes.com

SAC Capital Advisors, the hedge fund owned by the billionaire investor Steven A. Cohen, told its investors on Friday that it would no longer cooperate unconditionally with the government's insider trading investigation. Vice closing on Steve Cohen?


Ralph Deeds profile image

Ralph Deeds 3 years ago Author

6-4-13NYTimes "A Tale of Wall Street Excess, a Peed Into World of Hedge Funds" by Peter Littman

A Tale of Wall St. Excess - NYTimes.com

A former trader traces his rise and descent in “The Buy Side,” a memoir about the underbelly of big-money, fast-paced hedge funds.


Ralph Deeds profile image

Ralph Deeds 3 years ago Author

7-11-13BusinessWeek "Hedge Funds are for Suckers!

Hedge Funds Are for Suckers - Businessweek

According to a report by Goldman Sachs released in May, hedge fund performance lagged the S&P 500 index by about 10 % points this year, although most managers still charged enormous fees in exchange for access to their brilliance.


Ralph Deeds profile image

Ralph Deeds 3 years ago Author

7-22-13NYTimes--Government Case Reveals Cohen's Links to Dubious Transactions at SAC

Case Reveals Cohen's Links to Dubious Actions at SAC - NYTimes.com

In a detailed legal filing, the S.E.C. uses phone records, e-mails and instant messages to paint Steven A. Cohen as a boss deeply engaged in his employees questionable behavior at SAC Capital Advisors.

http://dealbook.nytimes.com/2013/07/21/s-e-c-case-...


Ralph Deeds profile image

Ralph Deeds 3 years ago Author

8-17-13NYTimes- As SAC Investors Jump Ship, SAC Cuts Back

As Investors Jump Ship SAC Cuts Back

"It looks to the final months of 2013, SAC’s prospects are grim as the fund, while operating under a criminal indictment, prepares to become leaner with virtually no outside investors...."


Ralph Deeds profile image

Ralph Deeds 2 years ago Author

10-17-13 NYTimes "SAC Capital Reaches a Tentative Insider Trading Settlement $1 Billion"

SAC Capital Reaches Tentative $1 Billion Settlement

SAC Capital, the embattled hedge fund indicted on insider trading charges, has reached a tentative deal to settle the case and pay more than $1 billion in fines. The fund, run by billionaire Steven Cohen, struck the deal with federal prosecutors acc


Ralph Deeds profile image

Ralph Deeds 2 years ago Author

10-31-13NYTimes Cohen Art For Sale

Steven A. Cohen to Sell Works at Sotheby’s and Christie’s - NYTimes.com

Steven A. Cohen is selling some $80 million in art at Sotheby's and Christie's this fall, though people close to him say the sales are not an effort to raise money for his mounting fines and legal fees.


Ralph Deeds profile image

Ralph Deeds 2 years ago Author

1-3-14BloombergBusinessWeek-"Why SAC Capital's Steven Cohen is Not in Jail"

Why SAC Capital's Steven Cohen Isn't in Jail - Businessweek


Ralph Deeds profile image

Ralph Deeds 2 years ago Author

2-6-13 Wall Street Journal--SAC Portfolio Manager Convicted of Insider Trading!

Former SAC Portfolio Manager Martoma Convicted of Insider Trading

A jury found former SAC Capital Advisors portfolio manager Mathew Martoma guilty of insider trading, a verdict that burnishes prosecutors’ trial record in such cases in recent years but doesn’t directly affect the firm’s founder, Steven A. Cohen.

Mr. Martoma was convicted of taking part in what prosecutors say was one of the largest insider-trading schemes ever—illegal trades on two pharmaceutical companies that helped SAC and its traders book profits and avoid losses worth a total of $276 million.


Ralph Deeds profile image

Ralph Deeds 2 years ago Author

5-9-14NYTimes OP-ED "Now that's Rich!" Paul Krugman

Log In - The New York Times

"Once upon a time, you might have been able to argue with a straight face that all this wheeling and dealing was productive, that the financial elite was actually providing services to society commensurate with its rewards. But, at this point, the evidence suggests that hedge funds are a bad deal for everyone except their managers; they don’t deliver high enough returns to justify those huge fees, and they’re a major source of economic instability."


Ralph Deeds profile image

Ralph Deeds 2 years ago Author

7-22-14NY Times--Sleazy Tax Avoidance by Hedge Funds Aided By Banksters

http://dealbook.nytimes.com/2014/07/21/senate-inqu...

"A Senate investigation has found that hedge funds — in particular, James H. Simons’ Renaissance Technologies — used complex financial structures to claim billions of dollars in tax savings."


Ralph Deeds profile image

Ralph Deeds 2 years ago Author

9-16-14NYTimes "Top U.S. Pension Fund Says It Is Done Investing With Hedge Funds"

Calpers Done with Hedge Funds

" Hedge funds have underperformed the S& P 500-stock index for the last five years... In 2013, for example, the average hedge fund returned just 9.1 percent, according to the data firm HFR. That compares with a 32.4 percent increase in the S.&am


Ralph Deeds profile image

Ralph Deeds 2 years ago Author

9-20-14NYTimes "Slamming the Door on Hedge Funds" by Gretchen Morgenson

Log In - The New York Times

"Citing high costs and complexity associated with its holdings in 24 hedge funds and six so-called funds of funds, Calpers said the investments were “no longer warranted.” Hedge funds typically charge 2 percent of the assets they manage and an..."


Ralph Deeds profile image

Ralph Deeds 16 months ago Author

":The average hedge fund returned 3 percent last year compared with a 13.7 percent gain for the Standard & Poor’s 500-stock index."


Ralph Deeds profile image

Ralph Deeds 4 months ago Author

5-13-15NYTimes "Big Insurers Send a Wake-up Call to Hedge Fund Investors"

Log In - The New York Times

    Sign in or sign up and post using a HubPages Network account.

    0 of 8192 characters used
    Post Comment

    No HTML is allowed in comments, but URLs will be hyperlinked. Comments are not for promoting your articles or other sites.


    Click to Rate This Article
    working