Board-Ansicht
Mix-Ansicht- Eliot will bis zu 300 Hedge Funds die Löffel langziehen *gg* - kingsolomon, 09.09.2003, 14:52
- Das kommt davon, wenn"large traders" long in Gold sind:-)))))))))))))))))))))) (owT) - Luigi, 09.09.2003, 14:58
- Es steht fest: ' Der Spitzer verursacht einige 'Schwitzer' (owT) - Emerald, 09.09.2003, 15:18
Eliot will bis zu 300 Hedge Funds die Löffel langziehen *gg*
-->Spitzer's Fund Probe May Sting Samaritan Hedge Fund
Sept. 9 (Bloomberg) -- Samaritan Asset Management, a $200 million hedge fund, may have engaged in the same sort of trading that led Canary Capital Partners LLC to pay a $40 million settlement, according to New York State Attorney General Eliot Spitzer's complaint against Canary.
''Our general focus is mutual funds, but our scope includes hedge funds,'' said Paul Larrabee, a spokesman for Spitzer. He declined to comment on whether Samaritan of Barrington, Illinois, was a target or if it had received a subpoena. Ed Owens, Samaritan's founder, didn't return phone calls to his office.
Spitzer is investigating special privileges that mutual fund companies gave hedge funds. Last week Canary, led by Edward Stern, the 38-year-old son of billionaire real estate developer Leonard Stern, agreed to the settlement, without admitting guilt, for allegedly participating in ''illegal trading schemes.'' Spitzer said this wasn't his last action.
The charges by Spitzer raise ethical questions about whether money managers give preferential treatment to large investors at the expense of individuals. Almost half of all U.S. households own at least one mutual fund.
About 300 hedge funds endeavor to make money by trading in and out of mutual funds, according to Hedge Fund Research, an industry consultant in Chicago. Samaritan is one of these funds, according to Spitzer's complaint against Canary.
Spitzer said Bank of America Corp., Bank One Corp., Janus Capital Group Inc. and Strong Capital Management Inc. let Canary trade shares after the market closed and engage in short-term market timing in exchange for ''millions'' in additional revenue.
U.S. mutual funds shares are valued daily at 4 p.m. New York time. Investors who trade after the deadline can take advantage of market-moving information as much as 24 hours before the shares are valued again. Federal and state laws bar the practice.
Security Trust Connection
Samaritan is mentioned in Spitzer's complaint because of its relationship with Security Trust Co. of Phoenix, Arizona, which processes mutual fund trades for 401(k) and other retirement plans.
Security Trust allegedly gave Canary the ability to trade hundreds of mutual funds at that day's price after the market had closed, according to the complaint. It also helped Canary camouflage trades among those of Security Trust's 401(k) clients.
Security Trust agreed not to provide these services to any other market timer, with the exception of a hedge fund named Samaritan and another Stern vehicle, according to Spitzer's complaint. Spitzer didn't accuse Samaritan or Security Trust of any wrongdoing.
''We have not been charged with anything and have done nothing illegal,'' said Nancy Murphy, vice president of Security Trust. She confirmed that Samaritan had been a client of Security Trust and had traded mutual funds through the company.
Subpoenas
''Based on the complaint, Samaritan could be a target,'' said Scott Berman, an attorney at the law firm of Brown Rudnick Berlack Israels LLP in New York.
Spitzer has subpoenaed dozens of mutual funds and hedge funds, including Millennium Management LLC, a $4 billion hedge fund that trades mutual funds among other strategies, and asset management companies including Vanguard Group and BlackRock Inc., the companies said. Spitzer is trying to get information about how business is done, something even investors in these hedge funds don't know much about.
''They are extremely tight-lipped,'' said Richard Rudy, managing principal of Stillwater Capital Partners, a $400 million New York-based fund that invests in hedge funds. ''We have almost no money with market-timing funds because they won't give us transparency.''
Market-Timing Techniques
Market-timing hedge funds try to make money by taking advantage of the fact that mutual funds are priced once a day, while the price of their holdings changes constantly.
If U.S. markets rally after European or Asian markets close, for instance, market timers will buy up international funds because they expect those funds to rise in value the following day as international markets follow the U.S. higher.
Trading mutual funds isn't illegal. Yet, most mutual fund companies say they don't allow rapid buying and selling of the funds because it hurts longer-term investors.
For hedge funds to succeed in the strategy, they must either hide their activity from the fund groups, or get their permission to trade. The latter usually is usually gained by promising to park some money in the companies' funds, on which they earn fees.
It's the latter practice that Spitzer particularly wants to end.
Last Updated: September 9, 2003 05:46 EDT
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