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Singapore orders hedge fund 3 Degrees to shut down on claims of fraud

Wednesday, October 19, 2011
Opalesque Industry Update - On Tuesday, Singapore’s Monetary Authority (MAS) ordered 3 Degrees Asset Management Pte, a private independent asset management firm based on the island state, to shut down its operations on allegations that its founder Moe Ibrahim had diverted assets.

MAS is Singapore's central bank and supervises the banking, insurance, securities and futures industries.

According to a report from Bloomberg, the regulator and the Finance Minister gave 3 Degrees until November 29th to wind down its operations and withdrew its exempt fund manager status. The hedge fund manager is appealing the order and an October 20th closed door hearing was set to discuss the petition.

3 Degrees, which manages $215m in assets, was investigated by the MAS after Ibrahim was accused by investor Agus Anwar of diverting at least $3.7m (or $6.7m according to Bloomberg) from the fund’s assets. The allegation surfaced after one of 3 Degrees’ funds sued Anwar in 2008 to recover an estimated $40m in debt.

Ibrahim denies the accusations and said in court filings the transaction – if it had really occurred – would have been neither “illegal nor improper.”

Prominent former bank owner Indonesia-born Agus Anwar was in March this year declared bankrupt by the High Court in Singapore, reported The Straits Times. The debt-ridden businessman, who reportedly owed 23 creditors a total of $103.3m, had been trying to stave off bankruptcy proceedings by putting forward repayment proposals to his creditors.

3 Degrees is an established player in Asian credit markets; the firm announced the launch of the Credit Opportunities Fund with initial assets of $27.3m in Jan-10. In March-09, it also launched ADF Prime Ltd, a credit opportunities fund that invest primarily in the performing debt obligations of Asian companies that have been mispriced as a result of the credit crunch. 3 Degree’s flagship, the Asian Distressed Fund, was up 8% YTD as at end-June according to the firm’s website.
Precy Dumlao (edited by B.G.)

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