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The Morning Brief: SAC Foots Martoma's Legal Bill; Hwang and Tiger Asia Get SEC Fine

SAC Capital’s Steve Cohen is no doubt hoping that recently indicted former executive Mathew Martoma does not become a key government witness in the insider trading investigation. So it is not surprising to learn that SAC is footing Martoma’s legal bill, which includes the service of the high-profile attorney, Charles Stillman. He is said to charge as much as $1,300 per hour.

Another hedge fund manager has been fined by the SEC for insider trading. Bill Hwang, the founder and portfolio manager of Tiger Asia Management and Tiger Asia Partners, agreed, along with his firm, to pay $44 million to settle charges of engaging in two trading schemes involving Chinese bank stocks. Altogether they were accused of making $16.7 million in illegal profits. The regulator alleged that they sold short three Chinese bank stocks based on confidential information they received in private placement offerings and covered their shorts with private placement shares bought at below market prices. In a separate scheme, the SEC accused Hwang and his firm of trying to manipulate the prices of Chinese bank stocks with the ultimate goal of collecting higher management fees from investors. Hwang was one of the first hedge funds seeded by Tiger Management’s Julian Robertson. In August, Hwang announced he was closing down his fund.

Ken Griffin’s Citadel Advisors reported it owns four million shares, or 5.5 percent of Brinker International. The investment is passive. Citadel owned fewer than 83,000 shares of the casual dining company at the end of the third quarter, plus calls and puts on the stock.

Tim Peterson is planning to relinquish day-to-day management of Regiment Capital Advisors LLC, the $7 billion hedge fund firm he founded in 1999. The 51 year-old, who earned his reputation as a high-yield bond trader at Harvard University’s endowment, is the latest among a growing number of high-profile hedge fund managers to give up control of their firms.

Another person who is retiring from the business is Abbas “Eddy” Zuaiter, the chief operating officer of George Soros’s $23 billion family office. The 45 year-old is leaving the firm at the end of the year. 

Hedge funds for the most part are not known for being huge employers. A new study from Citi Prime Finance confirms this. It found that hedge fund managers with average assets under management of $124 million have, on average, 11.3 employees. This includes five people connected to the investment process, including the CIO and portfolio managers, research analysts and traders. Medium-sized funds — those with $544 million under management, on average — employed 19.7 people. Large hedge funds ($2.1 billion on average) employed 38.7 people, while so-called franchise hedge funds (with $13.5 billion under management, on average) employed 151.9 individuals.

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