U.S. Attorney Preet Bharara stunned the audience at Wednesday’s Delivering Alpha conference — and no doubt Steven Cohen of SAC Capital — when he dismissed widely published reports that there is a five-year statute of limitations to bring insider trading charges, stressing there is enough flexibility and potential interpretations of the law to bring securities fraud charges as much as 10 years after the committed crime.
“There are a lot of armchair lawyers and armchair prosecutors who think that they know what the legal theories are that we can pursue and what statute of limitations issues are and often they are quite wrong,” said Bharara. Rather, he told the audience at the conference, sponsored by Institutional Investor and CNBC, prosecutors have a “variety of options” which can provide the government with extra time. He also said the Dodd-Frank Act allows prosecutors to file securities fraud charges as much as six years after the offense is committed.
Click here for Institutional Investor's Storify coverage of the 2013 Delivering Alpha conference.
During a luncheon speech at Delivering Alpha, John Paulson defended his bet on gold, stressing it only accounts for a very small portion of the firm’s assets. He also said he was figuring the Federal Reserve’s quantitative easing would ignite inflation, which in turn would boost the price of the yellow metal. So far inflation has remained tame. However, he is sticking with this bet, figuring an improving economy will eventually spark that long expected rise in inflation.
Herbalife climbed to a new high of $52.16 on the same day that feisty 77 year-old activist investor Carl Icahn thanked Pershing Square’s Bill Ackman for making him richer when he decided to buy the stock in what seemed like a “spite” move. “Anyone who has made me a quarter of a billion dollars, I am not going to say bad things about,” Icahn told the audience at Delivering Alpha.
Investors seemed unshaken by a report earlier this week in the New York Post that the Federal Trade Commission recently told consumer activists that Herbalife’s practices seem to be “disturbing” and it is “looking into” the company. Ackman has told investors he is heavily banking on an FTC probe to help bring down the price of Herbalife’s stock. Icahn told the Delivering Alpha conference he “hasn’t sold a share.” The audience was told Ackman could not attend this year because he was attending a board meeting at Canadian Pacific, a major holding of the activist hedge fund. Too bad.
Hedge funds that specialize in foreign exchange trading still think they can make money betting that the dollar will rise in value in relation to the value of the Japanese yen. So-called FX funds, which lost money in May and June after riding this trade earlier this year and late last year, think the trend has not ended. Robert Savage, chief strategist at hedge fund FX Concepts, told Reuters his fund was putting on dollar-yen trades “but not in as big a way as in the past.”
The $2 billion Shropshire County Pension Fund yanked its investment with London-based investment firm Man Group, citing poor performance and high fees. Instead, the small British local-government pension plan will invest a small amount in London-based hedge fund firm Brevan Howard’s multistrategy fund. “We want to pay a reduced level of fees,” Justin Bridges, Shropshire’s head of treasury and pensions, told Bloomberg. The pension fund invests half the money devoted to hedge funds with the Brevan Howard fund and the other half in a fund of funds run by BlackRock.