Singapore Central Bank Moves to Shut Down Hedge Fund 3 Degrees

Oct 19 2011 | 8:48am ET

The Singapore Monetary Authority has told hedge fund manager Mohamed (Moe) Ibrahim to shutter his Singapore-based firm, 3 Degrees Asset Management, an order the company is challenging.

The rare move by the MAS was motivated by allegations that 3 Degrees had caused one of its three funds—the Asian Debt Fund—to lend US$6.7 million to Apache Assets “for the purpose of channeling the funds to 3 Degrees Capital Ltd, a company controlled by Mr Mohamed Ibrahim,” according to court documents seen by Reuters.

3 Degrees helps manage assets worth $215 million.

MAS decided on May 9 that 3 Degrees and Ibrahim were not considered “fit and proper” to manage funds and announced it would withdraw the company’s “exempt fund manager” status as of November 9.

3 Degrees, in a lawsuit filed in the Singapore High Court this month, challenged the central bank’s decision, saying the loan “was not channelled nor was it ever intended to be channelled to 3 Degrees Cap."

3 Degrees’ lawyers told Reuters that even had such a loan been floated, “such a transaction in itself is neither illegal nor improper and contains no basis for a finding that the plaintiff and/or Ibrahim are not 'fit and proper' persons to carry out business in the regulated activity of fund management.”

Bloomberg, which first reported the story, said 3 Degrees’ appeal of the ruling will be heard in a closed hearing on October 20.

Under Singapore’s Securities and Futures Act, fund managers with fewer than 30 qualified investors are exempt from licensing and business conduct requirements.

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