This content is from: Portfolio

The Morning Brief: Level Global's Chiasson Gets 6 1/2 Years

Another former hedge fund manager is headed for the slammer. Anthony Chiasson, a co-founder of Level Global Investors, was sentenced to six and a half years in prison stemming from his role in the government’s insider trading probe. Last week, his partner in the same crimes — Todd Newman, a former portfolio manager at Diamondback Capital Management — was sentenced to 54 months in prison stemming from his involvement in the insider trading probe. Chiasson and Newman were convicted of securities fraud charges on December 17. Chiasson was convicted of one count of conspiracy to commit securities fraud and five counts of securities fraud. Earlier in his career, he had worked for Steven Cohen’s SAC Capital Advisors.

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Economist Jeffrey Sachs is locked in a sparring match with the head of the Cayman Islands financial services industry trade group. It seems the folks in the Caribbean nation are upset that Sachs has warned in several letters to the Financial Times that a number of locals sit on way too many hedge fund boards, which undermines oversight of the industry. He also warned that the Cayman banking system is a “house of cards” for the global financial system, pointing out that it has $1.4 trillion in liabilities and assets. “Professor Sachs needs to understand that a significant part of the banking assets registered in Cayman are U.S. banks placing overnight deposits in their own Cayman-registered branch,” Cayman Finance Chief Executive Officer Gonzalo Jalles said in an e-mailed statement to Bloomberg. The Cayman Islands, with pristine beaches and western way of life, is an oasis among several poor Caribbean nations. About 10,900 hedge funds were registered there in the first quarter, up from about 9,990 in 2011, the highest among all Caribbean nations.

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As they gear up for the Hess annual meeting on Thursday, May 16, the five nominees selected by activist hedge fund Elliott Management to serve on Hess’ board said they will waive the potentially hefty fees they could earn if they win board seats. The nominees, who would receive $30,000 from Elliott for every percentage point that Hess outperformed its peers over their first term, said in a letter to shareholders they will waive their right to receive these payments.

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Upon further review…the hedge fund Clinton Relational Opportunity Master Fund has scrapped its plans to launch a proxy fight against Gleacher & Co. just five weeks after telling the investment bank it plans to nominate 12 individuals to the board at the next annual meeting. In a regulatory filing Monday Clinton said it was unsuccessful over the past several months to increase its ownership position in Gleacher by offering to purchase blocks of stock from the company’s largest holders “at prices significantly above” the prevailing market prices. “Clinton is encouraged by the progress Gleacher has made recently in reducing its operating businesses and head count and in monetizing its securities portfolio,” it added in the filing. “We believe these are steps in the right direction and will help demonstrate and create value for Gleacher stockholders.” It adds that Gleacher’s common stock is “significantly undervalued” and the company’s tangible book value plus its tax attributes, brand and public company status is worth substantially more than $1 per share. The stock closed Monday down more than 7 percent, at $0.65 per share, or an $80 million market cap. The stock traded above $9 as recently as 3 ½ years ago.

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