One Year Ago
»» A former SAC Capital Advisors trader, Ping Jiang, made news when a lurid lawsuit against him was unsealed. The court documents detail sexual harassment allegations made by Andrew Tong against his former boss in a 2007 case that was eventually dropped (no money was paid). According to the filing, Jiang forced Tong to wear women's clothing and perform sexual favors, among other alleged acts.
Tong’s accusations went nowhere, but the details of the case put Jiang’s name in the press again in connection with an FBI insider trading investigation related to SAC, which has not resulted in any allegations of misconduct.
Jiang has come back with a vengeance with his own firm, Ping Capital Management. Launched in June 2008, the Ping Exceptional Value Fund initially lost 34.26% in its first year but rebounded an astounding 192.73% in 2009 and is up 103.45% this year through October. The global macro fund, which manages $154.9 million as of October 31, focuses on China, Latin America and “other emerging market opportunities,” according to AR’s hedge fund database. A representative of Ping Capital did not respond to requests for comment.
»» Hedge fund firm Banyon Investments lost $775 million to Scott Rothstein’s $1.2 billion legal Ponzi scheme. The South Florida firm’s investments made it the biggest creditor of Rothstein’s law firm, which collapsed following allegations that its legal settlement investment strategy was a fake.
Rothstein would ultimately plead guilty, but George Levin, Banyon’s CEO, has denied that he knowingly participated in the scheme, as Rothstein’s victims claimed in a lawsuit. Levin did not respond to a request for comment, but a spokesman previously told the Sun Sentinel that his client was actually a whistleblower in the case and lost money. It’s not clear how much Levin was able to recover.
Five Years Ago
»» Paloma Partners Management was hit with big yearend redemptions as a result of mediocre performance. The then-$2.4 billion multistrategy flagship fund was positive for the year—“low single digits” according to one investor—but lagged industry benchmarks. Paloma reportedly prepared itself for perhaps $600 million in redemptions and planned to scale back its seeding platform.
Today, Paloma is smaller but has performed well. The firm managed $1.7 billion on November 30, is up 13% for the year, and the Paloma Partners fund has a net annualized return over the past five years of 13%, according to a recent investor letter. A Paloma spokesman declined to comment.
»» The Securities and Exchange Commission moved to stop hedge fund managers from skirting registration. The regulator said that if a fund's advisor, general partner or personnel withdraw their own investments from the fund during a lockup period, they become a “private fund” and are required to register as an investment adviser.
The SEC had recently mandated that hedge fund managers with 14 or fewer clients either register or establish the so-called lockup through which new investors would agree not to withdraw their investments for two years. But that mandatory registration imposed on hedge funds was soon overturned by the courts after a legal challenge led by Phil Goldstein of Bulldog Investors.
Today, registration is back thanks to financial reform legislation. The Dodd-Frank Act mandated virtually all hedge funds managing more than $100 million must register with the SEC, and those with $25 million to $100 million fall under state jurisdiction. The deadline to register is July 21, 2011.