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quarta-feira, setembro 27, 2006

Ainda e sobre os Hedge Funds, muito na berra...

Rep. Mike Castle (R-Del.) has introduced a bill in Congress requiring regulators to study risks that hedge funds pose to the U.S. economy and to make recommendations about disclosure requirements for the big investment pools.

"Regulators need to explore hedge funds and the potential risks they pose to financial markets and investors," said Castle, a member of the House Committee on Financial Services. "Transparency in our financial system is important for market discipline and investor confidence." Castle's statement comes the same day that Greenwich, Conn.-based hedge fund Amaranth Advisors LLC said it suffered big losses on natural-gas investments and is eliminating positions in the volatile commodity.

In a letter signed by Amaranth founder Nicholas Maounis and made available to MarketWatch Monday, the fund said it could be down more than 35% for the year to date when the natural-gas positions are unwound. "We have met every margin call to date. We are in discussions with our prime brokers and other counterparties and are working to protect our investors while meeting the obligations of our creditors," Maounis wrote in the letter addressed to investors. Early last month, MotherRock LP, an energy hedge fund run by the former president of the New York Mercantile Exchange, said it was shutting down also after suffering big losses in natural-gas markets in recent months.

Hedge funds have drawn scrutiny as they have become more accessible to average investors. Last month, SEC Chairman Christopher Cox told a Senate committee that his agency' is working on new rules about regulating the private investment partnerships. He said the investor-protection agency won't appeal a court ruling overturning a rule requiring hedge-fund managers to register with the SEC as investment advisers. Cox also said one proposal is a new antifraud rule that would effectively look through a hedge fund to its investors. Moreover, the SEC's considering increasing the minimum income and asset requirement for individuals who want to invest in hedge funds, Cox added.

Castle's bill calls on the President's Working Group on Financial Markets to study the type of information that the funds should disclose to the public; the potential risks that hedge funds pose to markets and investors; whether hedge-fund investors are able to protect themselves from risks associated with their investments; the growth of pension funds investing in hedge funds, and other issues. Castle acknowledged Congress has few days remaining before the November elections but said he was confident lawmakers would produce hedge fund-related legislation within a year. "There's a lack of information available to people that have to make decisions," Castle said.

1 comentário:

Francisco Beirão disse...

in FT

« Amaranth outlines its liquidation plans

By Ben White in New York

Published: September 27 2006 01:13 | Last updated: September 27 2006 01:13

Amaranth, the troubled hedge fund group, has told investors in private meetings that it would either liquidate its remaining assets or sell itself to a larger institution, people close to the matter said.

Amaranth, which lost $6bn on bad natural gas bets, has also told investors that Brian Hunter, who executed the trades, was no longer with the group and had not been given any termination payment. A spokesman for Amaranth declined to comment.

The fund group has also said it would try and return money as equitably as possible to all investors, regardless of different lock-up agreements. Hedge fund investors often agree not to pull money out for a significant period after first injecting funds.

The comments to investors come after Nick Maounis, Amaranth’s founder, said last week that his group would remain in business, although it would no longer engage in energy trades.

He did not say at the time if he meant Amaranth would continue to operate independently oras part of a larger entity.

Investors have said they believed it was unlikely that Amaranth would be able to continue as an independent operation. It faces multiple regulatory probes, possible lawsuits and the likelihood of most of its investors demanding their money back.

The Securities and Exchange Commission is probing whether Amaranth misled investors regarding its risk management and trading policies. The Commodity Futures Trading Commission is also examining Amaranth’s natural gas trades.

Amaranth sold its energy trades last week at a steep discount to JPMorgan Chase and Citadel, the hedge fund group. Amaranth has also held talks to sell at least a stake in its remaining assets to Citigroup.

In conversations with investors, Amaranth has said it was hoping to conclude a sale within the next two weeks. Amaranth began holding meetings this week after acknowledging that it had received a “substantial” number of redemption requests.

Fund executives have been attempting to explain exactly how they lost so much so fast. Amaranth has said bad bets on the difference between the price of natural gas contracts for the winter months of 2007 and the summer months of 2006 cost about $1bn and that overall bets on natural gas cost $2.5bn.

Further losses were accrued selling natural gas and other positions at a discount to meet margin calls.

Additional reporting by Anuj Gangahar.