Former SAC Capital Advisors portfolio manager Mathew Martoma was sentenced to nine years in prison for his role in an insider trading scheme. He was also required to forfeit $9.38 million. Martoma was convicted on insider trading charges in February for helping SAC make $275 million from either trading gains or avoided losses on trades of two pharmaceutical companies. The court’s probation department had recommended that Martoma serve between 15.7 and 19.6 years in prison. However, nine years is still a lot of time for an insider trading case.
Back in May, former SAC Capital Advisors portfolio manager Michael Steinberg was sentenced to serve 3.5 years after being convicted of insider-trading. The government repeatedly tried to get Martoma to plead guilty and provide information on his boss, billionaire Steven Cohen. However, Martoma never relented. Martoma is one of seven former SAC managers and other investment professionals to be convicted of insider trading. SAC earlier agreed to pay $1.2 billion to settle criminal charges. It also agreed to pay more than $600 million to settle civil charges with The Securities and Exchange Commission. Cohen later converted the firm to a family office and renamed it Point72 Asset Management
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The Securities and Exchange Commission charged a Minneapolis-based hedge fund manager, his investment advisory firm and another individual with “bilking investors” of more than $1 in a scheme to charge for bogus expenses and fees in order to recapture shrinking fees due to worsening performance. Steven R. Markusen devised a scheme in which he, his firm Archer Advisors and employee Jay C. Cope charged the hedge funds for fake research expenses, which were eventually deposited in Markusen’s personal checking account and spent on such items as country club dues, boarding school tuition, and a Lexus, according to the regulator.
The SEC says Markusen “charged investors twice for the fake research expenses.” He falsely claimed he paid Cope to conduct “research” for the funds and charged them for the research, and he and Cope “improperly diverted so-called soft dollars from the hedge funds to Cope for the same purported ‘research,’” claiming Cope was an independent consultant. The SEC also charged Markusen and Cope with concocting a scheme to boost the performance of the funds by inflating the stock price of its largest holding, “thinly-traded” CyberOptics Corp., which comprised more than 75 percent of the funds’ portfolios, according to the SEC.
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The HFRI Composite Index, from Chicago-based industry tracker Hedge Fund Research, rose 1.6 percent in August, its strongest month since February. The Weighted Index is now up 4.10 percent for the year. The HFRI Equity Hedge (Total) Index rose 1.64 percent in August and is now up 3.90 percent for the first eight months. This is less than half the 9.9 percent return for the S&P 500. August gains were led by macro and CTAs. The HFRI Macro Index climbed 2.1 percent in August, its best month since April 2011, thanks to the ever-tumbling euro. The HFRI Macro: Systematic Diversified/CTA Index jumped 3.1 percent, its best gain since July 2012.
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Walgreen appointed Jana Partners founder Barry Rosenstein to its board of directors and agreed to appoint another independent director nominated by the New York–based activist hedge fund firm, which also must be approved by the drug store chain.
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Michael Platt’s BlueCrest Capital Management cut its management fees on its quantitatively-driven funds to 1.5 percent from 2 percent, according to Bloomberg, citing a Regulatory News Service statement. The London-based firm implemented the change as of August 1. “The reduction follows an assessment of the CTA landscape and in particular the recent migration toward lower fees,” BlueCrest reportedly stated. BlueCrest’s total assets have declined to $27.4 billion from a peak of $37.4 billion in May 2013, according to the report.
