Hedge Fund Manager Fined and Banned for Mismarking Positions

UK Hedge Fund Manager Fined and Banned by Financial Services Authority for Mismarking Positions
The U.K.'s financial regulator Wednesday said it had banned and fined hedge fund manager, Loic Montserret of BlueCrest Capital Management, for mismarking trading positions as he tried to hide losses and keep his job. Monteserret is the first individual to be both banned and fined for mismarking trade positions by the Financial Services Authority. At one point, his mismarking resulted in the fund being overvalued by $8.6 million.

Montserret was banned from the securities industry for 15 years and fined GBP35,000.

Monteserret, manager of the BlueCrest Multi Strategy Credit Fund, was responsible for managing about $60 million of BlueCrest Capital Management's $12 billion in assets under management and is one of the UK's largest hedge funds.

Loic Albert Antoine Montserrat, now a former hedge fund manager manager at BlueCrest Capital Management Ltd., is the first individual to be both banned and fined for mismarking trade positions by the Financial Services Authority.

European Union Imposes Hedge Fund Regulations

EU Imposes New Hedge Fund Regulations
The European Union is proposing new rules extending oversight for the European hedge fund industry which has close to $1 trillion in assets by some estimates. The European Commission Wednesday proposed new disclosure requirements for hedge funds and private equity firms managing more than EUR100 million in assets. Many had expected, upon release of an early draft, that the AUM cutoff for firms would be as high as EUR250 million. This cutoff means only 3% of funds (accounting for 10% of assets), will be regulated under the proposal.

Germany and France in recent years have railed against hedge funds while the U.K., home to Europe's largest financial center has taken the opposite position. Germany and France, for example, believe certain derivatives and other aspects of financial markets have evolved to become beyond regulators' understanding and oversight. The U.K. for their part, believes stricter regulations will only push hedge funds and other alternative managers to locales with less stringent requirements.

Under the plan, firms exceeding the cutoff will have to register with regulators and provide information on their holdings, fees and the amount of money they borrow to boost their potential returns.

The commission's proposal still needs approval from E.U. governments and the European Parliament. Officials expect continued argument about how to manage the sector.

Record $40 Billion in Redemptions from UK Hedge Funds

Financial Times reports that UK hedge funds saw upwards of $40 billion in redemptions last month. This is the highest monthly level of hedge fund redemptions in the UK since figures were first compiled in 1990. Even worse for funds and their investors, hedge funds lost more than $100 billion in AUM from lost market value.

One manager of a large hedge fund said: "Any hedge fund that says they didn't get hit by massive redemptions at the end of September is lying."

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