Management and Goldman Sachs Asset Management turned to the UCITS
III structure fearing
that European regulations might make it all but impossible for
U.S. funds to take capital from foreign investors. Using the
mutual fund-like "Undertaking for Collective Investments in
Transferable Securities" was a way to legally avoid any such
restrictions by creating so-called passports to continue
attracting overseas investors regardless of rule
American hedge funds are still flocking to the UCITS structure
even as the long-debated European Union proposal to block
investment in U.S. funds—the AIFM
directive—has yet to be
Five Years Ago
| Sam Israel
III and Daniel Marino—the CEO and CFO, respectively,
of the defunct Bayou Group—
pleaded guilty in Federal
District Court to fraud charges related to lying to investors about
gains and losses in their $450 million Stamford, Conn.
trading-oriented hedge fund.
Israel was later sentenced to twenty years in
federal prison, but fled and faked his own suicide. After a
stint on the FBI’s Most Wanted fugitives list and
an international manhunt, Israel surrendered himself at a
Massachusetts police station in July 2008. He is now inmate No.
84430-054 at the Butner Federal Correctional Complex in Butner,
North Carolina, a low security prison for male inmates. His
scheduled release date is August 2027.
The FTC fined Durus
Capital Management founder Scott Sacane $350,000
two years after he told
investors he had "inadvertently" amassed huge positions in
biotech companies Aksys and Esperion Therapeutics.
Things, of course,
would get worse. The U.S. Attorney’s Office in New
Haven, Conn. said Sacane manipulated the stocks, and the fund
manager pleaded guilty in December 2005 to investment adviser
fraud. He was sentenced to three years in prison, three years
of supervised release, and ordered to pay restitution worth
approximately $5.7 million.