Hedge Fund

Demanding further intervention from the Federal Reserve to protect their endangered fortunes, thousands of the nation's leading hedge-fund managers marched on Washington today. Dubbed "The Million Mercedes March," the protest was said to be the largest chauffeur-driven demonstration in the capital's history. Limousines started jamming the streets of Washington at approximately 10 in the morning as irate hedge-fund owners converged on the Federal Reserve building to demand stronger action to protect their imperiled riches.

The Journal Register Co., which publishes a number of area newspapers, has been sold to a hedge fund with offices in New York, Dallas, Mumbai, and Dubai. Terms of the deal were not disclosed. The purchaser, Alden Global Capital, was an investor in the Journal Register Co., based in Yardley, when it emerged from bankruptcy in July 2009. Alden Global Capital also owns a "significant stake" in Philadelphia Media Network Inc., according to Greg Osberg, publisher and chief executive officer of The Inquirer, the Philadelphia Daily News, and Philly.com.

The former CEO of a hedge fund set up for the "little guys" and "moms and pops" admitted today that he conspired with others to swindle those same "little guys" of more than $4 million. Michael J. Spak, 44, of Burlington County, ran the Osiris Fund which convinced 75 people to invest $12 million from June 2009 through November 2011, according to court documents. Though Spak and his associates had promised to take no more than 3 percent fee, they spent $300,000 to buy the "Fintastic," a luxury sportfishing boat, and fraudulently diverted another $4 million, according to U.S. Attorney Paul J. Fishman.

The founder of several hedge funds, already serving 10 years in a German prison for defrauding investors of nearly $500 million, is now facing similar charges in Philadelphia. Helmut Kiener, 53, controlled a number of hedgefunds including K1 Global Limited, Oceanus, Mezzanine and K1 Invest. According to federal prosecutors, Kiener misappropriated $311 million in an elaborate Ponzi scheme that he used to pay for a luxurious lifestyle. Among Kiener's alleged victims: Bear Stearns which lost $82 million to Kiener for three years until the financial institution went belly up in 2008; Barclays Bank which lost $137 million and BNP Paribas which lost $13.4 million.

The New Jersey Pine Barrens aren't known as a financial center. But a hedge fund based in a Medford home enjoyed a brief and improbable reign atop lists of the nation's best-performing investments this year, before regulators and a federal judge in Camden shut it down. Shasta Capital Associates' claims of double-your-money yearly profit evaporated last month when the federal Commodity Futures Trading Commission won a court order from Judge Robert B. Kugler to freeze its assets and suspend its operations.

Does money grow best in the dark? At a time when securities cops and small investors are demanding more accountability in the financial markets, Pennsylvania's state pension fund is following some other big institutions in hiring unregulated investment managers whose methods are deliberately obscure. The $24 billion State Employees' Retirement System is moving billions from familiar, transparent, government-regulated stock-index funds to hedge funds, whose managers do not have to report what they do with clients' cash.

Investors who have been hurt by the stock market have searched for anything that has been making money during the last three years. For some, the answer has been hedge funds - high-risk, largely unregulated investment pools. Indeed, hedge funds gained an average of 11.2 percent annually in value the last five years, while stock mutual funds lost 1.2 percent in the same period, according to data from Van Hedge Fund Advisors Inc. Since 1990, the hedge-fund industry has grown more than 600 percent after adjusting for inflation, from $92 billion in assets to $650 billion, Van Hedge Fund Advisors estimated.

Millennium Partners L.P., a $5 billion hedge-fund company accused of improper mutual-fund trading, will repay $121.4 million in "ill-gotten revenues" under an agreement with New York and federal authorities, New York Attorney General Eliot Spitzer said yesterday. In addition, Millennium's founder, Israel Englander, 57, will pay $30 million, and two management companies will pay a total of $26.6 million. The combined $178 million will go to mutual-fund shareholders. "It dwarfs the size of any disgorgement I've ever seen in the hedge-fund arena," said Scott Berman, an attorney at Friedman Kaplan Seiler & Adelman L.L.P.

Three women who are veterans of the financial services industry announced yesterday the formation of NewMarket Capital Partners L.L.C., an investment company in Philadelphia that will manage two new hedge funds. NewMarket is managing the funds for CMS Cos., a Philadelphia investment company that helps entrepreneurs manage their money. Patricia Young, Diana Wagner and Mindy Posoff are the founders of the new hedge funds. "We think it's a great time to launch NewMarket Capital Partners because it's anticipated that over $2 trillion will be invested in hedge funds in the next five to seven years," said Young, 48, the company's chief investment officer.

How rich would you be if you could spend every dollar twice? If you could buy a home on the Main Line - and get a Shore house thrown in for free? If your next slot-machine pull came with a complimentary lottery ticket - and both won? That's something like what Pennsylvania achieved last year with a chunk of its $24 billion state workers' pension system. In late 2002, the State Employees' Retirement System invested $2.3 billion in scores of unregulated investment pools called hedge funds, then set up Wall Street trading arrangements - "equity swaps" - to buy the future gains or losses of a similar-size investment in the Standard & Poor's 500 stock index.

NEW YORK - A senior portfolio manager for one of the nation's largest hedge funds was arrested Friday, accused of joining an insider-trading conspiracy that the government said made more than $6 million illegally for the investment company founded by billionaire businessman Steven A. Cohen. The arrest broadens the government's probe of trading practices at SAC Capital Advisors, which manages $15 billion. Two weeks ago, the Securities and Exchange Commission said two affiliates of SAC Capital would pay more than $614 million in what federal regulators called the largest insider-trading settlement ever.

The founder of several hedge funds, already serving 10 years in a German prison for defrauding investors of nearly $500 million, is now facing similar charges in Philadelphia. Helmut Kiener, 53, controlled a number of hedgefunds including K1 Global Limited, Oceanus, Mezzanine and K1 Invest. According to federal prosecutors, Kiener misappropriated $311 million in an elaborate Ponzi scheme that he used to pay for a luxurious lifestyle. Among Kiener's alleged victims: Bear Stearns which lost $82 million to Kiener for three years until the financial institution went belly up in 2008; Barclays Bank which lost $137 million and BNP Paribas which lost $13.4 million.

It was an expensive throw of the dice: Back in 2006, the Pennsylvania State Employees Retirement System (SERS) and its board, headed by ex-state Rep. Nicholas Maiale (D., Phila.) , gave more than $3 billion to six private investment firms so they could use it to buy high-priced hedge fund investments, in hopes of fat profits. The goal was to beat the sluggish stock and bond markets and ease the system's deficit, which had been growing since Gov. Tom Ridge boosted pensions in 2001 but failed to pay for the increase.

The former CEO of a hedge fund set up for the "little guys" and "moms and pops" admitted today that he conspired with others to swindle those same "little guys" of more than $4 million. Michael J. Spak, 44, of Burlington County, ran the Osiris Fund which convinced 75 people to invest $12 million from June 2009 through November 2011, according to court documents. Though Spak and his associates had promised to take no more than 3 percent fee, they spent $300,000 to buy the "Fintastic," a luxury sportfishing boat, and fraudulently diverted another $4 million, according to U.S. Attorney Paul J. Fishman.

WEALTHY HEDGE fund CEO Daniel Shak is going after his ex-wife in one of the most lowdown and dirty ways a man can go after a woman. No, he's not after custody of the kids. He's after the shoes. Specifically, he wants to get his hands on his ex-wife Beth's extensive collection of designer stilettos. We're talking Christian Louboutons (a/k/a red bottoms), which start at about $600 and can cost upward of $4,000. Beth owns about 700 pairs of those alone, not to mention numerous pairs by the likes of Walter Steiger, Yves St. Laurent and Jimmy Choo.

The sale of The Inquirer, Philadelphia Daily News, and Philly.com will likely be announced Monday, according to several sources. A local investor group has spent much of the last two months negotiating to acquire PMN from its hedge-fund owners in a transaction valued at $55 million to $60 million, according to multiple reports. With paperwork still to be signed, delays are always possible at the 11th hour. The buyers of Philadelphia Media Network Inc. are a group of local investors, led by George E. Norcross III, executive chairman of Conner Strong & Buckelew, a South Jersey insurance brokerage; and Lewis Katz, former chairman of Interstate Outdoor Advertising.

WHY DID City Councilman Bill Green sponsor a bill that exempts private investment or hedge funds and their general managers from paying business taxes? Hedge funds have drawn scrutiny in the wake of the 2008 economic crash, in particular because their managers pay lower levels of federal taxes. But Green, who used to work in finance, says he's not trying to play favorites and is just looking to help the city's economy. "I anticipate this will create jobs and result in far more revenue," Green said.

The Journal Register Co., which publishes a number of area newspapers, has been sold to a hedge fund with offices in New York, Dallas, Mumbai, and Dubai. Terms of the deal were not disclosed. The purchaser, Alden Global Capital, was an investor in the Journal Register Co., based in Yardley, when it emerged from bankruptcy in July 2009. Alden Global Capital also owns a "significant stake" in Philadelphia Media Network Inc., according to Greg Osberg, publisher and chief executive officer of The Inquirer, the Philadelphia Daily News, and Philly.com.