AHL December Loss Dents Man Assets
Man Group, the London-listed hedge fund company, reported that a 6% December decline in its flagship trend-following manager AHL adversely affected sales. "The fourth quarter of the financial year has seen a decline in funds under management, driven principally by the negative performance of AHL in December, said Man Group chief executive Peter Clarke, in a statement.
"Reflecting that, private investor sales in the quarter were lower, although redemptions have continued to fall back towards their historically low levels. This dynamic is something we have observed in previous periods following negative AHL performance, he said.
The company says trading conditions were difficult throughout 2009 for trend-following strategies, with gains in stock indexes and metals more than offset by sudden market reversals in currencies and bonds.
Man's total assets were about $39 billion at the end of March, down from $46.8 billion a year ago. Mr. Clarke says the catalyst for improved sales will be material positive performance in the managed futures style and from AHL. This year so far AHL has done better. It was up more than 2% for 2010 and over 5% for the month though March 22.
"We have also continued significant investment in people and systems at AHL and have a strong research pipeline to apply AHL's trading methodology to a wider range of systematic strategies," Mr. Clarke said.
Regulator Alleges Long-Time Futures Ponzi Scheme
The US Commodity Futures Trading Commission charged Ohio resident Enrique Villalba Jr. and his firm, Money Market Alternative LP, with operating a fraudulent scheme that began as early as 1996 and continued through at least November 2009.
According to the CFTC, Mr. Villalba solicited investments from the public to trade S&P 500 futures and opened a futures trading account in the name of Money Market Alternative. He deposited more than $23.2 million in this account and had net losses of more than $17 million, but sent investors false statements showing consistent profits.
The regulator says the Mr. Villalba misappropriated at least $3 million in investor money to finance his coffee business and buy real estate among other things and used more than $7 million to make Ponzi payments.
In a separate recent action, the US District Court for the Western District of Virginia ordered John Donnelly, Tower Analysis Inc., Nasco Tang Corp., Nadia Capital Corp. and associated defendants to pay $4.6 million to settle a 2009 CFTC charge that they operated a $10 million Ponzi scheme. They misappropriated at least $1 million investor funds and committed other fraud in raising money to trade US Treasury Note and S&P 500 futures.
Newedge Prime Broker Wins Award
Newedge received the best prime broker capital introduction award from HFM Week. The Newedge prime broker business services liquid hedge funds using managed futures and global macro strategies as well as fixed-income arbitrage, quantitative, market neutral or long/short equity and volatility funds.
The cap intro team, headed by Duncan Crawford, has working relationships with a variety of investors. Philippe Teilhard, global head of prime brokerage, says the award proves Newedge's competitive edge in the capital introduction area.
EFX Starts Cap Intro For Emerging Managers
EFX Prime Services announced the first manager-investor get-together in its capital introduction program for investors in small and mid-sized funds and emerging managers. Family offices, wealth advisors and fund of funds that allocate to small hedge funds are expected to attend. EFX plans to hold at least eight events in 2010.
The upcoming event is scheduled for later this month in New York. "The program offers clients direct contact with our growing network of qualified and accredited early stage investors including family offices and Wall Street executives looking for co-investment ideas, according to EFX managing director Brian Stutman.
EFX, part of First New York Securities, a trading firm, announced the new hedge fund initiative last month. It in part draws on people from First New York. For instance, Mario Maugeri, EFX managing director of operations, joined First New York in 1995. Mr. Stutman says EFX has one of the most experienced teams in the industry.
Corzine Joins MF Global
Derivatives and securities broker MF Global Holdings Ltd. tapped Jon Corzine as chief executive and chairman. Until recently he was the governor of New Jersey and before that was a US senator. Prior to entering the political arena he was a partner at Goldman Sachs, where he developed business in Asia and held the job of chief financial officer. As senior partner of Goldman, at the time a private partnership, Mr. Corzine took the company public in 1999. He ended his Goldman career as chairman.
Exchange Volume Trends Mixed
Derivatives exchanges reported increases in some contracts and declines in others. CME Group says volume averaged 11 million contracts per day in March, up 2% from March 2009, and volumes in interest rates, foreign exchange, commodities and alternative investments and metals grew by double digits. However, CME equity index volume averaged 2.7 million contracts per day, down 35% from the previous March. Treasury futures volume rose 36% while Treasury options were down 8 percent.
Eurex Group reported average daily volume of 10 million contracts in March, down 17% from a year ago. This includes both Eurex contracts and US-based International Securities Exchange (ISE) contracts. Equity index derivatives fell to 69.5 million contracts from 92.5 million a year ago. But equity options and single-stock futures increased 8%.
Separately, Eurex Clearing introduced real-time risk management for clients. The firm says it is the first central counterparty to offer risk management and margining data in real-time to its trading and clearing members.
"Our customers will directly benefit from increased control over their own risk management and greater efficiency in their collateral management, says Thomas Book, a member of the Eurex Executive Board. "By offering such a service Eurex Clearing actively contributes to policy makers' goal of a safe and sound financial market structure.
The new service expands existing risk management tools and is available across all asset classes, including derivatives, cash equities, bonds and repo transactions. It is a response to the dramatic rise in the number of transactions and speed of trading due to the spread of algorithmic trading and direct market access. The system is based on open standards to allow customization of the data stream in different applications.