Monday, 20 October 2014
Last updated 2 days ago
Aug 25 2014 | 10:27am ET
Citigroup’s $285 million mortgage-backed securities settlement has cut it out of the hedge-fund sales business, at least for the time being.
Under the Securities and Exchange Commission’s new “bad actor” rule, adopted last year, firms with “a relevant criminal conviction, regulatory or court order or other disqualifying event” are barred from participating in private offerings. That means that Citi isn’t allowed to sell hedge-fund or private-equity investments to high-net worth clients, although it can still arrange sales to large institutions.
Citi has told hedge funds over the last two weeks of the new restrictions. Prior to the Aug. 5 approval of its settlement, it had offered access to about 40 hedge funds, including Och-Ziff Capital Management, to clients of its private bank.
Citi will require a waiver from the SEC to resume those sales, The Wall Street Journal reports, a process that could take time—and that could run into opposition from some on the commission.
Other banks that have reached similar deals with regulators are not covered by the provision because they finalized their settlements prior to the bad-actor rule’s adoption. But Citi’s settlement, which it reached in 2011, was initially rejected by U.S. District Judge Jed Rakoff, who said it did not go far enough. Rakoff was reversed on appeal, forcing him to approve the deal earlier this month.
But by initially rejecting the settlement, Rakoff inadvertently gave it more teeth by delaying its approval until after the bad-actor rule had come into effect.
Sep 22 2014 | 4:15pm ET
"I tell people that everybody likes good news and so if you have good performance that’s wonderful,” explains Mike McKitish of Peddie School's endowment, “but it’s the people that want to talk about the bad news or where they drifted and how they came back and how they stayed to their discipline…” that he wants to hear from. Read more…
Sep 30 2014 | 9:29am ET
The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…
Most traders agree that proper risk management is the key to successful trading. However, many traders depend on the deeply flawed measure of standard deviation as a benchmark of risk. Here we put it ...