High-Frequency Din Evokes Scandals Past as Gabelli Sees Ripoff (Bloomberg)
Scrutiny of high-frequency trading is stirring memories among investment veterans of earlier scandals when the government targeted price-fixing and fraud in U.S. equity markets. Michael Lewis’s book “Flash Boys” and probes by the New York attorney general and Federal Bureau of Investigation are spurring outcry from Washington to Newport Beach, California, as investors and politicians ask if exchanges are rigged. Shares of NASDAQ OMX Group, Inc. (NASDAQ:NDAQ) and Intercontinentalexchange Group Inc (NYSE:ICE) have lost at least 8.8 percent in 2014 after each posted their best annual gains since 2007 and 2006, respectively.
Sears CEO Slices Off Assets, Leaves Less for Bondholders (WSJ)
Chief Executive Edward Lampert is carving out some of the best pieces of Sears Holdings Corporation (NASDAQ:SHLD) +0.08% for its shareholders, moves that could leave bondholders at risk if its remaining businesses continue to deteriorate. The latest step in that pattern was Sears’s spinoff of Lands’ End, one of the crumbling holding company’s few bright spots. Shares in the preppy clothing maker were distributed to existing Sears shareholders on Friday. Lands’ End had net income of $79 million in the most recent year, compared with a loss of $1.4 billion for Sears Holdings. All told, in the past 27 months Mr. Lampert, whose hedge fund owns nearly half of Sears’s stock, has distributed to shareholders—through various means—assets and divisions valued at roughly $2.3 billion.
A field guide to shareholder-friendly activism (Reuters)
The rise of shareholder activism has made it harder to distinguish between different species. Many corporate agitators say they are acting for all investors. Billionaire Carl Icahn’s online mission statement, for instance, touts “a platform from which we can unite and fight for our rights as shareholders and steer towards the goal of real corporate democracy.” Whether that’s true depends largely on the goals and methods used. Breakingviews provides a field guide to the activist animal kingdom. …Leo Strine, the vocal former Delaware chancellor who is now the state’s chief justice, implies in a recent essay that the relatively robust market for corporate control, evinced by widespread successful activism, may mean that power is now fairly balanced between boardrooms and investors.
SEC forms squad to examine private funds (VCCircle)
The U.S. Securities and Exchange Commission (SEC) has put together a dedicated group to examine private equity and hedge funds, after the 2010 Dodd-Frank law required the funds to be regulated, according to people familiar with the matter. The examiners will look at areas including how private equity and hedge funds value their assets, disclose their fees, and communicate with investors. The SEC regularly examines a wide range of financial institutions including brokerages and clearing houses to ensure compliance with federal securities laws. But the regulator’s exams have been criticized for missing big violations such as the Ponzi scheme at Bernard Madoff’s asset management arm.
Hedge Fund Seeks Assets in Nevada in Battle Over Argentine Debt (WSJ)
Argentina’s dispute with creditors took a twist as a U.S. hedge fund in search of defaulted debt is seeking to seize assets allegedly owned by a close associate of Argentine President Cristina Kirchner and her late husband and predecessor Néstor Kirchner. The move is the latest legal long shot launched by NML Capital Ltd., founded by U.S. billionaire Paul Singer, as it chases Argentine assets across the globe in its battle over the government’s 2001 sovereign-debt default on almost $100 billion. Creditors have tried to have courts seize the presidential plane Tango 01 in 2007 and to embargo a navy training vessel that docked in Ghana in 2012. NML recently filed suit in California to block Argentina from launching a pair of satellites into space.
Bahrain’s Investcorp tie-up targets European distressed debt (Reuters)
Bahrain-based investment company Investcorp is seeking exposure to distressed debt in Europe through a tie-up with Eyck Capital Management, a newly established investment manager founded by former hedge fund principal Khing Oei. Investcorp will provide Eyck with capital as the new London-based firm invests in opportunities related to highly leveraged companies in Europe, using instruments including bonds, credit default swaps and equities, Investcorp said on Sunday.
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