From the NY Times: With the federal pension insurance program in a rapid decline and bracing itself for another year of record losses, officials in the Bush administration are close to unveiling a rescue plan - medicine they hope will be strong enough to save the agency from a costly bailout but not so strong that it kills the pension system.

...Another important component of risk is the way companies invest the money in their pension funds. A portfolio of junk bonds, hedge funds or high-risk stocks obviously poses a greater risk to the pension program than a portfolio of high-grade bonds. The administration has also been thinking about factoring portfolio risk into its premiums, but appears to have run into opposition from business and investment interests who say the government has no business telling companies how to invest. Officials may eventually settle for indirect methods of encouraging conservative investments. Full article: {literal}Source{/literal}

From IPE.com: California governor Arnold Schwarzenegger has said the state’s pension system – which includes the California Public Employees Retirement System - is “out of control” and should shift to defined contribution. “Like the budget itself, our state pension system is another financial train on another track to disaster,” Schwarzenegger said in his annual State of the State address.

“California's pension obligations have risen from $160m in 2000 to $2.6bn this year. Another government program out of control, threatening our state. Accordingly, we must do what business has been doing. “For new employees, we must move from a defined benefit to a defined contribution system. We need a public pension system that is fair to employees and to taxpayers.” Full article: {literal}Source{/literal}

From BusinessWeek.com: Making its first move, Bear Stearns Merchant Banking has snapped up John Henry Co., a 93-year-old Lansing (Mich.) outfit, BusinessWeek Online has learned. The value of the deal wasn't disclosed, but it's estimated to be worth more than $100 million. Bear Stearns plans to use John Henry as a base on which to bolt more acquisitions, according to Phil Carpenter, Bear Stearns Merchant Banking Managing Director. After that, the plan is to sell off the business or take it public. {literal}Source{/literal}

A Swedish toddler was reunited with his father Wednesday, days after being found alone in the aftermath of the deadly tsunami that swept Asia. Hannes Bergstroem was found after the waves subsided Sunday and taken to a hospital on this resort island for treatment. His photo was posted on the Internet Monday.

The two-year-old's uncle saw the photo and claimed the boy Tuesday. On Wednesday the child was reunited with his father, Marko Karkkainen, at a hospital on the southern Thai island of Phuket where both father and son were receiving treatment. Hannes, his face scratched and pocked with mosquito bites, looked puzzled as his father choked up with emotion.

Editor’s note: There are still emails circulating in the internet asking for help to identify the boy. {literal}Source{/literal}

From InstitutionalInvestor.com: Auditors' fees jumped 20% in 2004 from the year before, but they may not have anything to do with Sarbanes-Oxley compliance. Karl Nagel writes on the Sarbanes-Oxley web site, that preliminary results, based on Securities and Exchange Commission figures, show that SOX compliance may not be responsible for the increase. Full article: {literal}Source{/literal}

From an FT article: Companies covered by the scheme, banks, commodities traders and other financial institutions had begun investigating the carbon emissions trading market, said Laurent Segalen, director of investment funds at IXIS corporate and investment bank in Paris. Even hedge funds had started to take an interest, he said. "They see it as an interesting new market."

Mr Segalen said he expected London to be the main centre for carbon trading, as it had the necessary financial services infrastructure and was home to a large number of carbon specialists. Trading in carbon emissions futures has been going on, but only now can deals be formally completed. Full article: {literal}Source{/literal}

Quant managers State Street Global Advisors (SSgA) and Barclays Global Investors (BGI) have attracted the most new assets over the past 12 months, according to this year's Global Investor Top 100 Asset Managers survey. The increases propelled SSgA into first place, leap-frogging Fidelity Investments, which has come first for the last three years. BGI retained its third place ranking. Article lists the top 10 with their assets: {literal}Source{/literal}

From Boston.com: A federal judge yesterday upheld some of the main charges against former brokers at the Boston office of Prudential Securities who securities regulators said hid thousands of improper trades that defrauded dozens of mutual fund companies.

Judge Nathaniel M. Gorton of US District Court in Boston rejected the five brokers' request to dismiss the civil fraud charges, saying the complaint filed by the Securities and Exchange Commission provided sufficient information, including examples of the brokers using multiple account numbers to hide their identities, to allow the case to proceed. Full article: {literal}Source{/literal}

From the Chicago Sun Times: Insider trading that netted a Chicago man nearly $244,000 in quick profits also landed him a 21-month federal prison sentence Wednesday. Ryan Evans, 27, was convicted last year of fraud after prosecutors alleged his college buddy, a financial analyst with access to private information, tipped him off to four pending corporate mergers in 1999 and 2000. Full article: {literal}Source{/literal}

Euronext cash bid for Exchange
From ThisIsMoney.co.uk: Euronext today dramatically raised the stakes in the GBP1.5bn auction for the London Stock Exchange by announcing that its bid is 'likely to be solely in cash'. This came as a surprise to investors, who had assumed that the Paris-based amalgam of the French, Dutch and Belgian bourses would have to make its offer in a mixture of shares and cash. LSE shares rose 5p to 580p while Euronext shares slipped 1.1% to EUR21.75.

A cash-and-shares offer from Euronext would have made its bid potentially much less attractive than that of rival Deutsche Borse which has already placed an indicative cash bid of 530p a share on the table, valuing the LSE at GBP1.3bn. The move by Euronext chief executive Jean-Francois Theodore was also seen as a bold gambit, revealed on the day his German exchange rival Werner Seifert holds his second formal meeting with LSE executives headed by Clara Furse. Theodore is also due to meet her again tomorrow.
Link

Euronext says no guarantee yet it will bid for LSE
The European financial market operator Euronext said it could not yet guarantee making a bid to take over the London Stock Exchange (LSE).
Link

Deutsche Boerse offer to manage Eurex out of London
Deutsche Börse is offering to manage its Eurex derivatives business from London as part of its takeover proposal for the London Stock Exchange.
Link No online Source

From Bloomberg.com: Aberdeen Asset Management Plc, a Scottish money manager that's reimbursing investors who lost money after some funds collapsed, said its fiscal 2004 loss widened by more than five times because of the cost of the compensation. Full article: {literal}Source{/literal}

IPE.com reports PGGM, the E57bn pension fund for healthcare and social workers in the Netherlands, says it has benefited from the dollar’s recent slide against the euro. Writing in Holland’s Financieele Dagblad, Gerlof de Vrij, the fund’s head of strategy and research investments, says PGGM’s decision in 2000 to fully hedge its currency exposure has paid off.

“Ten years ago, PGGM started hedging its currency exposure, first for 50% and from the year 2000 onward, for the full 100%.” The fund made an exception for emerging market currencies. PGGM decided to fully hedge because it believes that, in the long run, currency exposure only leads to volatility, instead of yields. Full article: {literal}Source{/literal}

From the Economic Times/India Times: The finance ministry today made clear that it would be difficult to let unregulated hedge funds invest in India in wake of the stock market scams that wrecked Dalal St in 2000 and 2001 and the subsequent comments from the joint parliamentary committee (JPC) investigations.

Speaking about hedge funds inflow at a seminar on financial sector reforms, he said it was important to ensure that it comes from hedge funds regulated in some part of the world. “As of now, it will be difficult to let unregulated hedge funds invest here,” he said. {literal}Source{/literal}

Hi-Tech companies founded by Indians in the US raised over $216 million in venture capital/private equity financing during the quarter ended December 2004. Of the 23 companies that raised financing during the quarter, at least seven companies closed rounds of $10 million or more, according to data from TSJ Media, which tracks venture capital and merger and acquisition activity involving Indian-founded companies worldwide. {literal}Source{/literal}

From Bizmonthly.com: While the past several years have been hard on technology companies and their venture investors, 2004 was clearly a better year and future prospects are much brighter still. There has been a significant increase in merger and acquisition activity and every indication is that it will continue, making 2005 the best yet of the 21st century.

There is a lot of money available in venture capital (VC) funds targeted for good new investments. For many of them, the last few years have been driven by caution and focused on making sure existing investments survive and prosper. VCs are now moving out of that mindset and seeking experienced teams with unique ideas that solve real problems. Full article: {literal}Source{/literal}

From FinanceAsia.com: The Asian Debt Fund, a Singapore-based distressed debt manager launched by ex-Lazard banker Moe Ibrahim, has soft-closed the first tranche of its fund, having surpassed $55 million within the one year since its launch. The fund is sponsored by Finansa, a Bangkok-based investment bank, and Japan Asia Investment Corporation, a Tokyo-based venture capital company.

The Asian Debt Fund was one of the best performing Asian hedge funds in 2004, returning 25% to mid December with no down months. The fund returned 5% during the month of October. By contrast, the ABN Amro Eurekahedge Index for Asian hedge funds was up just 4% to mid-December. Full article: {literal}Source{/literal}

From FinanceAsia.com: The A hedge fund manager specializing in global media companies explains how the sector works: Neil Carter, Sydney-based manager for Rutherglen Capital, discusses his global media fund. Established at the end of 2002, the fund currently has $28 million under management and the two partners are just starting to actively market it for the first time.

Q: Why a media hedge fund?
John Kenny and I have a combined experience of over 15 years analyzing the media sector. We both previously worked as sell-side analysts with ABN AMRO in London, where we were a number-one rated media team by Institutional Investor, Extel and Reuters....Full article: {literal}Source{/literal}

Dow Jones / Morningstar write China's banking regulator has ordered trust companies to separate their own businesses from the funds that they manage to help control risks. Trust companies should set up firewalls between trust services and their own business, build separate financial accounts and designate different senior managers to these departments, the China Banking Regulatory Commission said in a statement posted on its Web site late Thursday.

The CBRC notice is among a series of rules launched since last year managing the practice of trust firms that invest in high-risk industries, such as property and securities, in the pursuit of high returns. Some trust firms were found to have illegally misused clients' money to fund their own business. Full article {literal}Source{/literal}

Japan's central bank governor said Thursday that it remains unclear whether Japan can put a stop to ongoing deflation by the end of fiscal 2005. "There is a high possibility that the rate in the rise of consumer prices will exceed zero percent before the end of fiscal 2005. However, it remains unclear (whether it will actually happen)," Bank of Japan (BOJ) Gov. Toshihiko Fukui told reporters in New York. {literal}Source{/literal}

S&P gets court order to stop SPDR option listing
Investors looking to trade a hot new derivative - options on the Standard & Poor's Depositary Receipts, commonly called "Spiders" - may have to wait a little longer. McGraw-Hill Cos., the parent company of S&P, has been granted a temporary restraining order that effectively delays the option industry's bold push this week to begin trading Spider options. (Dow Jones)

U.S. business group blasts Spitzer
The head of the nation's largest business association issued a blistering broadside against New York Attorney General Eliot Spitzer Wednesday, charging he is abusing his power as a law enforcement official. The attack on Spitzer came when U.S. Chamber of Commerce President Tom Donohue was asked at a press conference how the business group planned to challenge what it calls "excesses" among some white collar investigations in recent years. "He's the investigator, the prosecutor, the judge, the jury and the executioner," said Donohue. (Newsday.com)

Bear Stearns OKs $1 Billion Buyback
Bear Stearns Cos. on Wednesday said it will purchase up to $1 billion of common stock that will be used primarily to mitigate the effects of the firm's stock award plans.

Morgan up as hedge fund manager urges change
U.S. financial-stock indexes finished higher Thursday, as Morgan Stanley shares added about 2 percent and boosted the brokerage sector after a report that a hedge-fund manager is urging the company to sell some units. (CBS.MW)

Islamic Development Bank pledges 500 million dollars for tsunami victims
The Saudi-based Islamic Development Bank (IDB) Thursday pledged 500 million dollars in aid to countries affected by the Asian quake and tsunami that has killed more than 146,000 people. (AFP)

Singapore allows Platinum to sell hedge FOF
UK-based Platinum Capital Management said on Thursday it had won regulatory approval from the Monetary Authority of Singapore (MAS) to distribute a fund of hedge funds

Citi, Other Foreign Banks Control 22% of Korean Market (JP33)
From Bloomberg.com: Citigroup Inc., HSBC Holdings Plc. and other foreign lenders controlled 22 percent of South Korea's banking market as of Oct. 31, a fourfold increase since Asia's third-largest economy sought foreign investment to help bailout the industry in 1997. According to Bloomberg, forty-one banks wholly owned or controlled by foreigners operating in South Korea had 270 trillion won ($255 billion) of assets as of Oct. 31, the Financial Supervisory Service said in a statement. Overseas lenders controlled 4.2 percent of the market in 1997, the year of the Asian financial crisis.

Merrill Lynch Japan targets wealthy clients via bank tie-ups
Merrill Lynch Japan Securities Co. plans to market hedge funds and other financial products to high networth clients (Asia Pulse) No online Source

GAIM USA 2005: January 18-20, 2005 * Boca Raton Resort * Boca Raton, FL
Register by January 7th and save $400:

Over 800 senior industry leaders are expected in 2005. Book today, the hotel will sell out soon!

At GAIM USA 2005, the largest gathering of hedge funds in the USA , you will find assembled the most senior and expert industry leaders who will share with you their unique insights into how the industry is going to meet its challenges and where the strategic investment and business opportunities will be in 2005. There is no better place to get an early start to achieve many of your key objectives in 2005, and get incisive information on some of the most pressing questions facing the industry

Hear some of the world’s leading investors discuss the criteria they employ in considering future allocations to the hedge fund sector. You will get a good understanding of how you need to change or adapt your products and services to meet the needs of the institutional client.

Plus…over 12 hours of networking breaks, cocktail receptions and luncheons during the event!

Register by January 7th and save $400: To Register or for more information, visit www.gaimusa.com
Please mention priority code: XUAMB

2 Day conference: 31 January – 1 February 2005, The Selfridge Hotel, London

10% REBATE for Alternative Market Briefing Readers (quote AMB) and FREE to attend for institutional investors.

Attend Finance IQ's Generating Absolute Returns for Pension Funds - a pension fund packed conference where huge opportunities exist for hedge fund providers who have established relationships with current and future investors.

Your clients - institutional investors - are coming so they can hear from top hedge fund experts such as Christopher Fawcett from Fauchier Partners LLP, Simon Ruddick from Albourne Partners, James Walsh from Hermes Pensions Management, Chris Mansi from Watson Wyatt, and many others regarding the changing nature of absolute return investment strategies.

The following organisations will also be presenting at this exciting event: ABP Investments, Lloyds TSB Group Pension Fund, Asterias, Clwyd Pension Fund, EDHEC Business School, the Financial Services Authority, Lovells, Mercer Investment Consulting, Pacific Alternative Asset Management Consultancy, Sabre Fund management Ltd., Schneider Capital, Merseyside Pension Fund, Skandia life and Insurance Company.

To guarantee your place visit: www.iqpc.co.uk/GB-2314/amb email: enquire@iqpc.co.uk or call +44 207 368 9300

1 - 3 February, Steigenberger Frankfurter Hof, Frankfurt, Germany

Get the definitive facts on the German hedge fund market at Germany's premier hedge fund event for investors and fund managers.

Conference highlights include:

• Are the new rules presenting real opportunities?
• Analysis of local single hedge funds and funds of hedge funds trends
• How much money has actually been allocated to hedge funds in Germany?
• Focus on German investors - who are they and what are they really buying?
• How is Germany positioning itself against other major hedge fund markets
• Successful styles and strategies in challenging times

Top-level speakers include:

• Alexander Appelt, Senior Portfolio Manager, SwissLife Germany
• Ernst-Ludwig Drayss, Partner & CIO, Berlin & co. KGaA
• Fred Siegrist, Co-Head & CIO, RMF Investment Management
• Alberto Giovannini, CEO & Director, Unifortune SGR SpA
• Ulf Becker, Head of Equity Hedge Funds & Senior Portfolio Manager, Lupus Alpha

To obtain your 10% rebate as an Opalesque subscriber, call Naheed Sharmin on +44 (0) 20 7827 5980 or mailto:naheed.sharmin@terrapinn.com. Website: www.hedgefundsworld.com/2005/hfw_DE

Now that the SEC has voted to adopt Rule 203(b)(3)-2 requiring the mandatory registration of hedge funds, the industry is grappling to come to terms with its implications and the practical steps necessary for achieving compliance, while ensuring minimum disruption to day-to-day business. We will address not only the latest SEC developments, but will also provide essential tools for tackling operational and valuation challenges. Whether you are a registered or unregistered hedge fund or a fund service provider, this seminar offers you crucial and timely insights on how to succeed in today’s highly competitive and rapidly changing environment.

Whether you are a registered or unregistered hedge fund, an investment advisor, compliance officer, fund manager, prime broker, custodian, fund administrator or attorney, come to this event to improve your knowledge on:

• Dealing with the SEC: experiences from the front line and lessons learned
• Portfolio valuation strategies: best practices and case studies
• The use of soft dollars by hedge funds in the changing regulatory arena

NEW - Investor panel: How do institutional investors define hedge fund best practices
NEW - Best practices in operational risk management
NEW - Hedge fund roundtable: fund managers share their first-hand experiences
NEW - Best practices for marketing your hedge fund
PLUS – Post-Conference Workshop: Nuts & Bolts for Building an Effective Compliance Program. Opalesque readers will get a 10% rebate if they call the hotline and identify themselves. http://www.iievents.com/default.asp?Page=12&lID=31&LS=Referrer%20-%20http://iievents.com

4th Annual Blue Ribbon Hedge Fund Symposium January 30- February 2, 2005

“The Premiere Meeting Place for Hedge Fund Managers and Institutional Investors

Fairmont Scottsdale Princess – Scottsdale, Arizona

Each January 200+ hedge funds, fund of hedge funds, pension plan sponsors, consultants, and other decision makers convene in Scottsdale to take stock of the burgeoning hedge fund industry. This year's focus is on how to obtain alpha through the investment strategies used by today's best and brightest managers.

www.srinstitute.com/cx551

6th annual Hedge Funds World Middle East 2005 at the Jumeirah Beach Hotel, Dubai, UAE

The Middle East's premier hedge fund event for investors and hedge fund managers: Be at the forefront of the Middle East’s lucrative hedge fund market in 2005!

With a strong and sound basis for exponential growth, the Middle East is fast becoming a real focus for international hedge funds. Hedge Funds World Middle East delivers on meeting the educational and business needs of the Middle Eastern investor. Indeed, last year an unprecedented 43% of all attendees were institutional investors! 6 important facts about Hedge Funds World Middle East:

• 425+ participants in 2004
• 43% investor audience in 2004
• 40+ expert speakers
• 8+ hours of networking
• 3 days of high-level content
• World-class venue
• ONE PRESTIGIOUS EVENT…

New for 2005: Television coverage on CNBC Arabiya, the Arab world’s first and only Arabic language business and financial news channel

DON’T MISS OUT! To receive your 10% rebate as an Opalesque subscriber contact Naheed Sharmin on: +44 (0) 20 7827 5980 or naheed.sharmin@terrapinn.com

GAIM - The World's Leading Alternative Investment Event Series Launches gaimAsia:

• 11 years track record of delivering the best. The GAIM team has an unrivalled reputation for developing winning programmes and forging enduring partnerships that attract in quantity, the most influential and successful high quality speakers and delegates that everyone wants to meet (1500 attendees at June GAIM 2004)
• Great choice of sessions with 3 concurrent streams daily
• The freshest talent and the most senior and respected speakers and delegates - more CEOs and top performing managers than at any other event
• 100+ speakers, including: Clifford Asness, Co-Founder & Managing Principal, AQR CAPITAL MANAGEMENT, Charles Gave, Chairman, GAVEKAL GROUP OF COMPANIES, Michael Sofaer, Managing Director, SOFAER CAPITAL, Masakazu Arikawa, President, SONY GLOBAL PENSION MANAGEMENT CORP. Jerry Wang, Chief Executive Officer, VISION INVESTMENTS , Professor Ross Garnaut, Executive Chairman, SEQUOIA CAPITAL MANAGEMENT, Matthieu Vermersch, Senior Managing Director, EVEREST CAPITAL, Moses Tsang, Chairman, AJIA PARTNERS (HK), Paul Calello, CEO Asia, CREDIT SUISSE FIRST BOSTON, Zhang Haitao, CIO, CITIC CAPITAL, Simon Ogus, CEO, DSG ASIA, Arthur J Samberg, CEO, PEQUOT CAPITAL MANAGEMENT and many more...
• Top level networking in Hong Kong during the week of the Rugby 7s!

Programme and registration details on http://www.icbi-uk.com/r.asp?uID=221 or please call +44 20 7915 5197.

Build your brand and create new business with the intelligent marketing options of the Opalesque Alternative Market Briefing - the industry's favorite hedge fund newsletter! Please email me: knab@opalesque.com for details. Communication that works!

ISSN Number: 1450-1953
Alternative Market Briefing has been called the best news service on hedge funds. Our mission is to intelligently select and timely provide the most important daily news for professionals dealing with hedge funds. Alternative Market Briefing offers both a quick overview and indepth coverage of all subjects through the "Source" link that leads you to the publicly available online news sources. The concept that we follow is that of a "clipping service" - the added value for you is that we screen, intelligently select and efficiently present each day the most important hedge fund news. The majority of the news sources used do not require a subscription, however some may ask you to register. Once registered, you can access these news sources freely. Please mail us your feedback and suggestions to feedback@opalesque.com - we love to hear from you!

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Disclaimer: The information contained in this newsletter does not constitute an offer or solicitation to sell any security or fund to or by anyone in any jurisdictions, nor should it be regarded as a contractual document. Under no circumstances should the information provided on this newsletter be considered as investment advice, or as a sufficient basis on which to make investment decisions. The information contained herein has been gathered by Opalesque Ltd. from sources deemed reliable as of the date of publication, but no warranty of accuracy or completeness is given. Opalesque Ltd. is not responsible for and provides no guarantee with respect to any of the information provided herein or through the use of any hypertext link. Past results are no indication of future performance. All information in this newsletter is for educational and informational purposes and does not constitute investment, legal, tax or accounting advice.