Street Talk

Hedge Fund Round-up

Mathew Martoma’s Fatal Mistakes.   At the age of 40, Mathew Martoma just lost his criminal case on insider trading and is now facing nine long years in prison if he doesn’t succeed on appeal.  He has also lost his fancy house in Florida, the companionship of his wife and children and the $9.4 million bonus he earned from Stevie Cohen of SAC Capital in 2008, the year he pulled off his one blockbuster trade.

Private Fund Round-up

Writing on the wall for hedge funds?

In a paper entitled How Important Are Hedge Funds in a Crisis?, a German economist by the name of Reint Gropp challenged the notion that hedge funds played an insignificant role in the global financial meltdown of 2007-9. 

PE/VC Round-up

PE/VC Presence in the USPreqin reports that there are 3,535 private equity and venture capital firms currently headquartered in the US.  Of those, over 41% are located in California and New York.  PE/VC firms in those two states accounted for 58% of the $1.9 trillion of PE/VC funds raised in the US over the past 10 years, with New York accounting for 69% of that amount ($748 billion). 

Activism on a Roll

Hedge fund activists are sitting in the catbird seat right now.  They had a great 2013, winning 68% of their proxy fights (compared to 43% in 2012), raising more than $7 billion in new capital and targeting 20 companies with market values above $10 billion.

Money Round-up

Pope Francis’ Plaintive Plea.  In his new apostolic exhortation to Catholics around the world, Evangelii Gaudium (“Joy of the Gospel”), Pope Francis beseeches the rich to “help, respect and promote the poor” and “return economics and finance to an ethical approach which favors human beings.”  The Pontiff dismisses the notion that trickle-down economics will bring about greater justice and inclusiveness as a “crude and naïve trust in the goodness of those wielding economic power” and asserts that “as long as the problems of the poor are not radically resolved by rejecting the absolute autonomy of markets and attacking the structural causes of inequality, no solution will be found for the world’s problems.”  According to the Holy Father, our culture of prosperity has deadened us to the plight of the poor and, in order to avoid our degenerating into a totally heartless society, we must rid ourselves of the ‘idolatry of money’.

National Round-up

DetroitExtra Pension Payouts?Who knew that Detroit had for years been taking money out of its pension fund when investment returns exceeded actuarial assumptions and paying it out to thousands of city employees and pensioners whose “base” pensions were deemed to be too small?  

World Round-up

UK — FCA to Warn Investors about Fraud Targets:  Until now, the UK’s financial regulator publicly revealed the identities of alleged securities violators only after it had made the decision to impose a penalty or initiate a proceeding.

What Exactly Is a ‘Pyramid Scheme’?

Given the princely sums currently being wagered by the likes of Bill Ackman, Carl Icahn and George Soros on the ultimate fate of Herbalife, I thought you would like to know the critical difference between a legitimate multi-level marketing program (MLM) and an illegal pyramid scheme.