Morgan Stanley Names New AI Head
In a signing of prime brokerage’s increasing rank on the investment bank ladder, Morgan Stanley announced today that it had promoted its top PB exec to head up the firm’s entire Alternative Investments business. The 40-year-old Stu Bohart has been with MS since 1997 when he joined up as a portfolio manager. He will report to Owen Thomas, president and COO of Morgan Stanley Investment Management. Wonder what his pay package looks like.
Morgan Stanley Names AI Head [Reuters]
Another Ponzi Scheme Bites the Dust
In more image-boosting news for the hedge fund industry, the SEC announced yesterday that it was bring charges of fraud against a Valencia, California fund manager for misappropriating funds and misleading investors. The 34-year-old principal of CMG-Capital Management, Keith G. Gilabert allegedly lost more than half of the $14.1 million he had raised from 38 investors while pocketing another $1.7 million himself. Not surprisingly, another $4.6 million was used to keep the ponzi scheme going. Gilabert also failed to mention to investors that the firm’s investment adviser registration had been revoked in 2003. Nice.
Litigation Release No. 19680 [SEC]
Goldman Competing Against Its Own Clients?
It’s hardly the first time anyone’s brought this up, but as Goldman’s bottom-line evolves to look more and more like that of a hedge fund, there’s growing concern in some quarters that the bank is increasingly in the conflicted position of competing against its clients for deals.
In yesterday’s Wall Street Journal, Goldman CEO Hank Paulson had to tackle that accusation head-on:
I strongly disagree with your assertion. We look to co-invest with our clients. Our clients, by and large, are very sophisticated. And so when our clients ask us to perform a role they are pretty thoughtful about it, and they’re doing it based upon our history of being able to manage conflicts and potential conflicts. I do believe that the way in which we manage the conflicts and perceived conflicts is critical to our reputation and we would not have the market share we have and the client relationships we have if we weren’t able to manage those in a way in which it meets the high standards we set.
Staggering On The Line [MarketWatch]
Goldman CEO Tackles Critics [Wall Street Journal]
Hedge Funds: The Dumb Money in VC?
Start-ups are finding it easier and easier to raise money, in part because of an eagerness on the part of hedge funds to cross-over into the private, early-stage space. The Journal claims that hedge funds are often willing to pay more for stakes in new companies than the venture capitalists themselves, prompting one to wonder if the traders have any idea what they’re doing. Usually, though, they’re just investing along side vc’s that are leading the deal. In the biggest raise of the first quarter, for example, Los Angeles-based Amp’d took in $150 million from a consortium that included four hedge funds in addition to a handful of vc’s. The last time this happened, things didn’t turn out so well.
Hedge Funds Get Active in Start-Ups [Wall Street Journal]
Hedge Fund Managers Fudging Results? Never!
A few guys with Ph. D. after their names are wondering whether hedge fund managers are managing their returns in the same way company execs in recent years have drawn attention for managing earnings. How else to explain the fact that funds consistently report their best results in the month of December followed by weakness in January. “It looks like they could be faking some of the numbers,” says Naveen Daniel of Purdue, one of the authors of the paper “Why Is Santa So Kind to Hedge Funds?” Unfortunately, they have no real way of knowing because, Daniels points out, “we have no clue what they are doing inside the funds.”
Are HF Results for Real? [NY Times]
