Archive - Oct 18, 2009 - Story

Rajmahal was just the beginning. The Sri Lankan, who just made the record books for spending a generous $100 million on bail and has even bigger digs in New York's Sutton Place complex (although not quite Richard Perry big), is just the proverbial appetizer. And if regulators have truly decided to start treating the hedge fund industry like the 21st century equivalent of organized crime (as previously disclosed by the US attorney), tonight many other wannabe billionaires are not sleeping too well (and even considering checking out Expedia for some sweet one-way trip deals). Because if they are not, they will be after reading the most recent take on their upcoming plight. From Bloomberg: "Federal investigators are gearing up to file charges against a wider array of insider-trading networks, some linked to the criminal case against billionaire hedge-fund manager Raj Rajaratnam that shook Wall Street last week, people familiar with the matter said." If nothing else, this will hopefully force many of them to reevaluate the nomenclature of what funds to allocate the hundreds of billions of dollars that have emerged from the "sidelines" recently: it would appear The Insider Trading Rapid Value Appreciation Offshore Fund, most recently developed at Shady Pickins Asset Management, may not be the best appellation after all.

The most convoluted monthly report issued by the US Treasury, that of Treasury International Capital (TIC) flows was released on Friday, and it disclosed some troubling data points. While foreigners overall continued purchasing domestic assets, their appetite continues to decline. In particular foreigners increased their purchases of Treasuries marginally, while they continued selling off corporate bonds and agencies, while buying corporate stocks. Yet, most troublingly, the Big 3 (China, Japan and the UK) purchased the least net total of Bonds and Billsyear to date: as the Fed now dominates the market for Treasuries, traditional buyers are becoming increasingly nervous.

A few years ago, if you wanted to get into a “green” or environmentally friendly car you had a limited lot to choose from and the premium you paid was considerable. And for what? To drive a lowly Prius? Or a heavy, clumsy Lexus 600h running in at well over six-figures? And was the premium really worth it? Meet the Mercedes-Benz of hybrids- the 2010 S400 BlueHybrid. This is not your typical green car. It’s a “blue” Mercedes-Benz- the first real production car in the world to use a lithium ion battery- a “mild hybrid” worthy of the Three-Pointed Star.

• The best unknown activist investment of 2009 (Greenbackd)
• Words from the wise (Financial Armageddon)
• CME in talks to buy CBOE for $5 billion (Bloomberg)
• UBS warned U.S. customers by registered mail their account details may be given to U.S. tax authorities (Reuters)
• Goldman can spare you a dime (NYT)
• The extinction of ethics in finance - The Fallout (Reality Arbiter)

A lone suicide bomber, on foot managing to catch unawares five "senior commanders" in Iraq where only the smartest and best organized insurgents are still alive to mount such action might be a three or four sigma event. A lone suicide bomber, on foot managing to catch unawares five "senior commanders" of Iran's Revolutionary Guard by waiting by the entrance of the complex where they were to meet local tribal leaders... that's a bit rarer still. Whisperings of Western involvement in the incident are... still just whisperings.

Yep, the yellow water has been falling on the floors of many of Wall Street's finest hedge funds. They're all glued to their toobs watching footage of the insider trading arrest of Raj Rajaratnam, founder of Galleon Group, a prominent New York-based fund firm that manages $3.7 billion. Raj, according to allegations published in the Wall Street Journal, played it fast and loose with insider trading rules by talking to prominent executives inside publicly traded companies and to executives who had specific information on pending deals and earnings at publics. Other hedges are probably not the only ones scared out of their minds. Other fearful parties likely include Gerson Lehrman Group, DeMatteo Monness, and the thousands of "consultants' who work for them. Who are these guys and why should they be afraid of what befell Raj?

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