JOHN F
HIGGINS, ELECTION CANDIDATE
2007, GENERAL
ELECTION, SLIGO NORTH-LEITRIM
“Confronting real issues”
Notes and Website extracts
Are Hedge Funds, Stock
Markets secure investments?
Mary
Meeker, Morgan
Stanley “Queen of the Net”.
She and
Bankers sold shares in hundreds of companies that should never have
gone public
Sunday
Times. Business
Feature Page 9. Wall Street is caught with its pants down
from book “The Accidental Banker: inside the decade that transformed Wall Street, by
Jonathan
Knee. Oxford
University Press.
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Hedge funds
borrow,
this is the hedge; by so
doing it
again increases the amount
of funds going
into Equities. This further
exacerbates the bubble
effect! Also,
hedge to protect investor’s wealth by using derivatives and short
selling.
Derivatives such as securitized financial instruments which provide a
method
for banks and other
creditors to unbundled
the risk involved with real
economic
activity.---------- By reallocating financial risks, this market
activity
provides the added benefit
of
lowering the financial
costs
shouldered by other sectors
of the economy. The absence
of hedge funds from these
markets could lead to fewer risk management
choices and a higher cost of capital.
Loads of areas for conflicts of interest Page
84
There are
no readily
available market prices for hedge fund securities. No independent
checks on
Valuation, a huge problem!
Staff
report to the United States
Securities and Exchange
Commission. Sept 2003
http://www.sec.gov/news/studies/hedgefunds0903.pdf
Last year,
managers had to
take home $130 million to make it into the
ranks of the top 25. And there was a tie for 25th place, so there were actually 26 hedge fund managers
who made
$130 million or more.
Six
managers
made the top 25 even while
posting
returns in the single
digits. Annual
hedge fund investment returns for the
past few years are only half of what they
were during the 1990s. Nevertheless,
more managers are making more money today
than ever before, as evidenced by Alpha's fifth annual survey of the biggest earners.
Top hedge fund manager had take-home pay
of $1.5
billion in 2005 on 5% fee and 44% of gains
Hedge funds,
lightly
regulated private investment funds for institutions and wealthy
individuals,
typically charge investors 2 percent of the
money under management and a performance fee that generally starts at
20
percent of gains.
The
stars
often make a lot more than this "2 and 20" compensation setup.
According to Alpha's list, Simons charges a 5 percent management fee
and takes
44 percent of gains; Steven A. Cohen, of SAC Capital Advisors, charges
a
management fee of 1 to 3 percent and 44 percent of gains; and Paul
Tudor Jones
II, whose Tudor Investment Corporation has never had a down year since
its
founding in 1980, charges 4 percent of assets under management and a 23
percent
fee.
http://www.finfacts.com/irelandbusinessnews/publish/article_10005996.shtml
see also
http://www.mccannfitzgerald.ie/ExternalUploadedFiles/hedgefundssept05.pdf
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That said, with hedge funds there
are widespread concerns about high charges, opaque strategies and
absence of
government structures among Pension Fund Trustees.
On either side of the
Atlantic, the
biggest blow-ups have occurred under the
very noses of regulators.
Matching
liabilities is
what pension investment is about now!
http://www.kpmg.ie/industries/fs/funds/hedgefunds2005.pdf
--------------------------
New,
complicated
financial instruments have made many banks’ risk-measurement tools
obsolete.
What Alan Greenspan terms the
“unconscionable” inability of derivatives traders to introduce the technology needed to keep track of
trades is
creating risk of unknowable magnitude.
American
Account, Irwin
Stelzer, The Sunday Times 4th June 2006.
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London
Briefing:
There was only one topic of conversation last week in the City of London:
the £50 million (€74.5
million) man.
In the bars, on the blogs and in an avalanche of envious
e-mails,
all the talk was of Driss
Ben-Brahim, the hotshot
head of
proprietary trading at Goldman Sachs who is said to have received a
£50 million
bonus from his grateful employer.
Last week, just before the
bonuses were declared, Goldman Sachs reported its most profitable year
ever,
with a 69 per cent surge in earnings to a record $9.54 billion (€7.22
billion).
Earnings in the final
quarter all
but doubled.
The investment bank said it will have paid out as
much as
$16.5 billion this year to its 26,500-strong workforce, around 5,000 of
whom
work in London.
http://www.ireland.com/newspaper/finance/2006/1220/1166138204022.html
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Just a week after Morgan Stanley
chief
executive John J. Mack scored an unprecedented $41.1 million bonus, there is a new record on Wall Street.
Securities
firm Goldman Sachs disclosed that it paid Lloyd C.
Blankfein,
its chairman and chief executive since June, a bonus of $53.4 million
in 2006, the highest ever
for a Wall Street chief executive.
Bloomberg also put the
bonus in context by noting that the
heads of the top hedge
funds, which
are investment pools for institutional investors and the
wealthy, can make hundreds of millions of dollars in a given year.
http://dealbook.blogs.nytimes.com/2006/12/20/goldman-chairman-gets-a-bonus-of-534-million/
----------------------------
In New
York City
alone, employees of the
securities
industry will receive $23.9 billion in bonuses this year 2006,
surpassing last
year's record by 17 percent, New York State Comptroller Alan Hevesi
forecast
today.
http://www.bloomberg.com/apps/news?pid=20601103&sid=ao1sWwgLA_BM&refer=news
---------------------------
SEC Charges
Former Apple
General Counsel for Illegal Stock Option Backdating
Commission
Also Settles
Claims Against Former Apple CFO for $3.5 Million
http://www.sec.gov/news/press/2007/2007-70.htm
--------------------------
Dating
Game
Stock-Options Criminal Charge:
Slush Fund and Fake Employees
U.S. Accuses 3 Ex-Executives
At Comverse Technology
Of Long-Running Scheme
Scrambling
to Avoid Detection
By CHARLES
FORELLE and
JAMES BANDLER
August 10, 2006
http://online.wsj.com/public/article/SB115513425710731067-_CKtbX9s2__kk0nHaaN0b_IbQ_Y_20070223.html?mod=blogs
--------------------------
The growing US
row over options backdating has already claimed more in-house careers
than all the post-Enron
collapses combined. Michelle Madsen
reports on the scandal that
raises
awkward questions for corporate counsel
Scandals
have become so
woven into the fabric of
modern
corporate culture that in-house lawyers could be forgiven for
thinking
that dealing with the
latest
incident of boardroom controversy is all in a day’s work.
http://www.legalweek.com/Navigation/34/Articles/1007788/Corporate+Counsel+Careful+what+you+wish+for.html
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There is so
much fraud in the USA
that investigation authorities
can only charge a small percentage JFH
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Is Share
Options Fraud just a peculiarity to the
USA?
Holders of Stocks and Shares can be ripped off to the
tune of hundreds of millions. It is easy, a small bunch of fellow
directors
just play dumb. JFH
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Auditors reject EU accounts again 25/11/2005
For the eleventh
year in a
row, the European Union's annual accounts have failed to gain a seal of
approval from the EU's own auditors.
http://news.bbc.co.uk/2/hi/europe/4438888.stm
Does
anybody have an idea what is going on? JFH
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