Rod Stringer, a former car salesman from West-Texas was running a Ponzi scheme similar in some ways to that of Bernie Madoff's famous scam. However, the magnitude of the losses from Stringer's hedge fund is far smaller. The $45 million fund reported annual returns as high as 60%, a number the SEC claims is completely bogus.
Among Stringer's 31 clients were many elderly investors. The SEC notes that the location of the remaining funds is unknown at this time.
Hedge Fund Redemptions Reach Record in Q4 2008:
Hedge fund investors withdrew more than $150 billion from hedge funds in the fourth quarter of 2008, a new record. Several funds including Tudor Investment Group, Citadel Investment Group, Drake Capital, and other large funds were forced to either suspend redemptions or create new lock-on requirements to halt the flow of assets.
Hedge funds lost more than 18% of their value in 2008 and saw total hedge fund assets under management (AUM) drop 30% from $2.0 trillion to $1.4 trillion in 2008.
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Among the dozens of casualties to result from the Madoff ponzi scheme is GMB Capital Management. GMB made $50 million in bad bets including large investments in Madoff's fund. GMB's ironically named Low-Volatility Fund previously had $100 million in assets under management. The hedge fund is run by Gabriel Bitran of MIT.
Bloomberg is reporting that Pequot Capital, a New York based hedge fund, is facing insider trading charges by the Securities Exchange Commission (SEC) related to positions in Microsoft in 2006.
Pequot Capital was founded by Arthur J. Samberg, Chairman and Chief Executive Officer. The fund began trading in 1986. The firm has US offices and employees in the California, Connecticut, and New York, as well as an international presence in London.
BNP Paribas is speculating that more than 3000 hedge funds that operated in 2008 will be gone by the end of 2009. BNP Paribas is also noting that hedge fund assets could fall under $1 trillion.
According to Hedge Fund Research, more than 600 hedge funds closed their doors in 2008. up more than 70% from 2007.
The third quarter, the last quarter for which data is complete, witnessed more than 300 hedge fund closures, a new record.
Citadel's Main Hedge Funds Lost 53% in 2008
Citadel Investment Group, the Chicago-based hedge fund founded by Ken Griffin, is reportedly facing losses of more than 50% in its Kensington and Wellington funds which lost almost 10% in December alone.
The funds assets had previously totaled more than $10 billion. The report comes after Citadel halted redemptions from its Kensington and Wellington funds until at least March.
Finvest, the Swiss alternative asset manager, has received $2.5B to launch a new fund aimed at private equity investments.
Finvest plans to invest $10-250 million in each of 25 to as many as 100 companies in the US and Europe.
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JD Capital Management is said to be liquidating the Tempo Master Fund, a fund that is reported to be down more than 40% on the year.
The hedge fund is run by J. David Rogers, a former Goldman Sachs executive.
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Assistant US Attorney Mark Litt sought yesterday to revoke Bernie Madoff's bail after allegations Madoff may have transferred as much as $1million in jewelry and other items to family members. A condition of Madoff's bail was that no money be transferred without court approval.
However, U.S. Magistrate Judge Ronald L. Ellis decided not to make any changes to Madoff's bail at this time.
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