Goldman Reps Seek Leeway On Volcker Rule
Representatives from Goldman Sachs, earlier this month asked the Federal Reserve to consider tweaking the 3% limit on bank ownership of credit funds imposed by the so-called Volcker rule, Bloomberg reports.
Managing Directors Ben Adler, David Thomas and Michael Koester, along with V.P. Eric Edwards and a coterie of lawyers, argued the rule should be increased to 5% because investors look for sponsors with “skin in the game.” The firm has historically bankrolled hedge, private equity and credit funds it has managed for clients. The firm’s decision to become a bank in 2008 put the kibosh on that practice.
Goldman’s own Gang of Four, perhaps in an effort to deal with the firm’s own image problem (“Vampire squid,” anyone?), said banks should be allowed to own more than 3% of a fund as long as it’s “predominantly engaged” in the credit business and doesn’t use “excess” leverage.
They added the investment strategy should require funds to hold loans for a minimum of three years, as well as make use of derivatives in order to hedge interest rate and currency risk. Notably, the group suggested the sponsoring banking entity shouldn’t be held responsible for guaranteeing or supporting the fund’s obligations.
Madoff Trustee Goes For Koch Money
Irving Picard’s gunning for the Koch brothers, HedgeCo.Net writes. The Madoff trustee’s filed suit against billionaires Charles and David Koch’s company, Koch Industries, for allegedly helping to finance the biggest Ponzi scheme in history through a feeder fund.
Picard’s seeking $21.5 million from the firm but it may be hard to make that one stick. A spokeswoman for Koch Industries said the feeder fund no longer exists and that the money was redeemed in 2005.
Feds Seek “Criminal Club” Amid Insider Trading Probe
Federal prosecutors have accused a group of hedge fund staffers including Diamondback Capital Management portfolio manager Todd Newman and Anthony Chiasson, a hedge fund manager formerly with Level Global Investors of being part of a “criminal club” where inside information was freely traded, The Wall Street Journal reports.
Jon Horvath, a technology analyst with SAC Capital Advisors ’s Sigma Capital Management arm was also accused of being part of the group along with Danny Kuo, a former v.p. for South Pasadena, Calif.’s Whittier Trust.
Federal prosecutors claim the group shared non-public information and other material about technology companies from employees at those firms to execute $61.8 million in trades. All those named denied the Fed’s accusations.