Hedgeweek Interviews
SEC looking to strengthen whistleblower programme
Gary Gensler, Chair of the US Securities and Exchange Commission (SEC), has revealed that the SEC is reviewing its whistleblower programme.
Delivering keynote remarks at the National Whistleblower Center’s (NWC) National Whistleblower Day 2021 celebration, Gensler spoke of the critical role whistleblowers play in SEC enforcement efforts and reemphasised his commitment to the agency’s whistleblower programme. He also revealed that he has directed staff to review the whistleblower programme in order to improve its efficiency and effectiveness.
“The tips, complaints, and referrals that whistleblowers provide are crucial to the Securities and Exchange Commission as we enforce the rules of the road for our capital markets,” said Gensler. “Each week, when I see the Commission’s enforcement actions, I’m reminded how the whistleblower program helps us be better cops on the beat, execute our mission, and protect investors from misconduct.
“I’ve asked staff to examine whether and how the programme can be further strengthened to ensure misconduct within the remit of the SEC is identified, addressed, and stopped. We must ensure that whistleblowers are empowered to come forward when they see misbehaviour and that they are appropriately compensated according to the framework established by Congress, and that those who report wrongdoing are protected by retaliation. I also believe we should look for opportunities to continue to reduce processing times in SEC whistleblower award determinations.”
"We are pleased to hear that Chair Gensler and his staff are reviewing the SEC's highly successful whistleblower program," said NWC Executive Director Siri Nelson. "While the programme has been an immense success, there are areas, such as the processing time for award claims, which need improvement. The SEC Whistleblower Program should be consistently reviewed to ensure that it best protects whistleblowers and serves the interest of the American public."
“NWC plans on engaging in the discussion around potential reforms and will issue formal comments soon after National Whistleblower Day,” adds Nelson. “We would be happy to meet with the Chairman, the Commissioners, and other members of the SEC Commission Staff.”
In the decade since it was established, the SEC Whistleblower Program has been an immense success. Whistleblower disclosures have allowed the SEC to recoup nearly $3 billion in monetary sanctions and the whistleblower program has awarded approximately USD942 million to 186 individuals.
In September 2020, the SEC approved a number of rule changes to its whistleblower program. A number of these changes, including altered rules on “related-action” awards and stricter guidance on awards for independent analysis, were criticised by whistleblower advocates.
Akin Gump appoints new partner
Akin Gump has added John P Hamilton as a Partner in its investment management practice in New York. Hamilton comes to Akin Gump from Stradley Ronon Stevens & Young, LLP.
Hamilton’s practice focuses on advising private fund managers on the formation and operation of a broad range of investment vehicles across the liquidity spectrum, including hedge funds, private equity and credit funds, as well as funds of funds and managed account structures. He also advises clients on the incorporation of sustainability and impact-focused investment themes into their product offerings. In addition, Hamilton works with clients on transactional and regulatory matters in connection with the operation of their businesses.
“Adding top-tier talent to our industry-leading investment management team continues to be a strategic priority for us,” says Akin Gump chairperson Kim Koopersmith. “The global hedge fund market is experiencing a period of rapid growth and there is an increased need from our fund manager clients for sophisticated advice and counsel. John provides exactly what our clients need and is an ideal addition to our team. I am delighted to welcome him to Akin Gump.”
Hamilton previously served as the Asia head of Hedge Fund Consulting at Morgan Stanley in Hong Kong, where he provided strategic guidance to hedge fund managers in launching and scaling their businesses. Earlier in his career, he served as in-house counsel at Highbridge Capital Management, LLC.
“John’s experience in the prime brokerage industry, particularly through his work in Asia, will be invaluable, giving him the perfect vantage point from which to work with clients on their fund formation needs,” says Prakash H Mehta, co-head of Akin Gump’s investment management practice. “He has shown a strong record of success throughout his career, and I am thrilled to have him with us as we look forward to even further growth in the coming weeks.”
Hamilton says: “Akin Gump has a market-leading global funds platform that spans the industry’s key business centres. This is a terrific opportunity to work with clients in what is presently a very fertile market for the hedge fund industry, and I am incredibly excited to be here.”
Hamilton received his JD from New York University School of Law and his BA from the University of Virginia.
Hamilton is the second recent significant addition to Akin Gump’s investment management team in New York. In April, the firm welcomed partner Brian Daly, a leading advisor to hedge fund managers and private equity fund sponsors.
Like this article? Sign up to our free newsletter Author Profile Related Topics Moves & AppointmentsState Street partners with Lukka to expand digital asset fund admin capabilities for alt investment clients
State Street Corporation is to provide digital and cryptocurrency asset fund administration capabilities for the firm’s private funds clients.
In partnership with Lukka, an enterprise crypto asset data and software provider, State Street will support its private fund clients with collection, standardisation, enrichment, reconciliation, processing and reporting related to crypto and other digital assets.
The partnership is State Street’s latest effort in the digital and crypto asset space following the launch of State Street Digital, a division focused on addressing the industry’s evolving shift to digital finance, and comes after Lukka’s Series C funding round in December of 2020, which was led by State Street.
“The growth in popularity of digital assets is showing no signs of a slowdown and State Street Digital is committed to continuing to build out the necessary infrastructure to further develop our digital assets servicing models to help meet our clients’ growing demands,” says Nadine Chakar, head of State Street Digital. “Our work with Lukka will leverage their software and data in order to help expand our digital and crypto asset fund administration capabilities to alternative managers is just another advancement in our digital solution set and marks a very exciting development.”
State Street will leverage Lukka’s product suite, which includes a proprietary middle and back office data management solution, purpose-built for blockchain and crypto asset data, as well as Lukka Reference Data, and Lukka Prime Pricing Data. This will enable State Street to consume crypto assets that are comingled within a private client’s traditional alternative investments portfolios.
“As our clients continue to adopt digital assets, such as crypto, we’ve seen increasing interest among investors for institutional quality middle and back-office offerings that support diversified portfolios,” says Jen Tribush, alternatives lead for State Street Digital. “Lukka was the ideal partner to help provide these services given their leading position in crypto asset data as State Street continues to add to our growing offering in the digital asset space.”
“State Street is leading the charge to usher in the next generation of fund administration,” says Robert Materazzi, CEO of Lukka. “Large, traditional funds are rapidly looking to add crypto to their offerings, which leads them to ask their existing, trusted service providers such as State Street for fund administration. State Street was quick to recognise the importance of building capabilities to support crypto assets and we are proud to partner with them as funds quickly look to diversify their portfolios.”
GSR names former JPMorgan executive as Global Head of Sales
GSR, a specialist in digital asset trading, has appointed Michael Bressler as Global Head of Sales.
Bressler will lead the firm’s ongoing expansion into the institutional market, developing trading, risk management, and capital strategies for the fast-growing base fund managers it serves.
Bressler joins GSR with over 20 years of experience in trading and institutional sales at top banks and hedge funds. Most recently, he was a Managing Director and Head of Western Region Sales & Marketing at JPMorgan, where he oversaw many of the bank’s top institutional relationships. Prior to this, Bressler also spent seven years as a Managing Director for Global Commodities at the bank. He began his career in commodity derivatives at Goldman Sachs (J.Aron) and also worked on the bank’s equity desk, before joining derivatives trading teams at Barclays Capital and Millennium Partners.
Cris Gil, Co-founder of GSR, says: “The trading needs of the institutional investor in digital assets are becoming more sophisticated. A core element of our business strategy for the next 12 months is to keep building out our quantitative trading and risk management capabilities and maintain our leadership as one of the top trading firms in crypto. Michael will play an instrumental role in that effort, given his institutional expertise and strengths and we’re looking forward to having his leadership on the team.”
Bressler says: “When it comes to investing in digital assets, Institutions have moved past curiosity and are looking into the practical implications, like execution quality, portfolio weightings, and risk management. This is exciting for people in traditional finance to make the leap and I was impressed with GSR’s reputation, leadership team, and technological strengths. “I’m excited to help traditional institutions navigate their entry into the digital asset space, supported by market-leading capabilities.”
GSR has rapidly expanded its team over the last 12 months, hiring former traders, risk managers and sales executives from major banks and hedge funds to further expand its institutional operations. Mr. Bressler’s hiring reflects an emerging trend among leading digital asset firms, where new sales and distribution channels for investment products are being developed in line with those that major institutions are familiar with for traditional asset classes. GSR is continuing to hire across the board and expects to have a headcount of 225 by the end of 2021.
Curve Finance adds euro-pegged tether (EURt) tokens
Curve Finance, an automated market maker protocol designed for swapping between stablecoins and other digital tokens with low fees and slippage, has today announced that it will support tether tokens pegged to the euro (EURt).
The addition of EURt to Curve – a protocol designed to create deep on-chain liquidity using advanced bonding curves – forms part of a surge in interest for the tether token pegged to the euro in the digital token space.
“As DEX’s grow in popularity, so do the requirements of their user base and we see great potential uptake of Tether tokens on the platform,” says Paolo Ardoino, CTO at Tether Operations Limited. “We are excited that Curve is now supporting EURt.”
“Adding EURt represents an important step towards moving Forex markets on-chain and to a world where the financial system will be fully decentralised,” says Michael Egorov, CEO at Curve Finance. “Historically both Tether and us were mostly focused on USD-denominated stablecoins. But we think the addition of EURt is an important step in a world that consists of multiple countries having non-USD stablecoins.”
EURt is growing in popularity across the digital token space with Bitfinex and BitStamp listing new tether EURt pairs to support burgeoning demand. The listing of these pairs offers users on these platforms additional fiat onramp options when looking to earn a yield in euros.
The euro is the official currency for 19 European Union member states and is the second-largest reserve currency and the second-most traded currency in the world after the US dollar.
UK consultant sees significant upswing in ‘first time’ hedge fund investors
Hedge funds are attracting greater numbers of ‘first-time’ allocators, with “unusual amounts” of fresh investors showing an interest in the space, according to London-based investment consultant, bfinance.
New interest has been growing since Q4 2020, accompanied by an increase in activity from clients with existing hedge fund portfolios.
Toby Goodworth (pictured), Head of Risk & Diversifying Strategies at bfinance, commented that prior to the end of 2020, the focus of his team was more on absolute return multi-assets than hedge funds, but following Q4 2020, “it was almost like a light switch turned on, and interest has been very solid ever since.”
bfinance is an investment consultancy headquartered in London that advises global institutional clients with a combined AUM of USD215 billion.
“We normally find that the die is quite cast when it comes to hedge fund allocation – you either use them and have a clear reason why you’re using them, or you’ve thought about it in the past and you’ve decided not to use them – so new allocations to hedge funds are relatively few and far between,” Goodworth commented.
bfinance clients looking to make their first allocation to hedge funds want to reduce or control their equity exposure, and do not want to go into fixed income to do this due to low yields and inflationary risk.
In the recent past, Goodworth explained, private markets might have won out over hedge funds in terms of their appeal in this situation, but now with hedge funds delivering increasingly attractive returns, clients are saying they need liquid alternatives in their portfolio to moderate their private market allocations.
Hedge Fund Research (HFR)’s main Fund Weighted Composite Index, a monthly measure of 1400 manager hedge fund’s performance, gained 10.03 per cent between January and June 2021.
Goodworth’s clients, both new and existing, are looking at a number of different hedge fund strategies, including event driven funds. Research by bfinance published in June showed that event driven managers posted a first quarter composite return of 7.3 per cent, their strongest Q1 performance since 1993, mainly due to the rapid uptake of M&A activity since Q3 2020.
Clients are also showing an interest in multi-strategy market independent hedge fund strategies. Goodworth commented that the appetite for these was strong “simply because they’ve got a lot of tools in the toolbox. Clients don’t necessarily want one specific type of strategy like event driven, long short or CTA, they want diversified sources of return in their portfolio.
“Multi strategy market independent hedge funds are becoming increasingly appealing to clients as they are not explicitly convex strategies – with clients expecting to lose money in order to get a payout in bad times. That strategy can be mixed with strategies that are a little more ‘all weather’, that do well independent of equity markets, but do slightly better when equity markets are struggling.”
Like this article? Sign up to our free newsletter Related Topics Funds InvestmentsAllvue Systems names Chief Legal Officer
Allvue Systems (Allvue), an alternative investment technology solutions provider, has appointed Deborah Mason as Chief Legal Officer and member of the Executive Leadership Team.
Mason will oversee the firm’s legal team and be responsible for supporting the firm’s corporate activity and managing risk exposure. She will also work closely with the leadership team to grow the business and optimise Allvue’s legal, compliance, and business contracting practices. Mason will report directly to Chief Executive Officer Mark Heimbouch.
“Allvue’s top-notch leadership team has enabled us to make huge strides over the past year, and the addition of Deb will empower us to smoothly continue on our exciting growth trajectory,” says Heimbouch. “Deb’s extensive experience consulting on risk and compliance matters as well as corporate strategy will provide critical support as we continue to scale our business and bolster our offering to meet the evolving needs of our clients.”
Mason brings to Allvue significant expertise in complex commercial transactions as well as data and technology transactions. She most recently held the role of General Counsel North America for NielsenIQ following its separation from The Nielsen Company into a stand-alone organisation. In this role, Mason was responsible for managing a legal support team in the US and Canada and provided counsel on a wide range of commercial and strategic matters including mergers and acquisitions, commercial transactions, product development, litigation, integrity and corporate compliance, privacy, and data security.
Previously, Mason worked in the US headquarters of GfK, where she led a wide range of commercial, strategic, and compliance-related legal matters and was responsible for establishing and managing the legal strategies and processes for all North American subsidiaries of GfK SE.
“Allvue has demonstrated significant strategic growth since its launch, and when meeting with the leadership team, I was extremely impressed by their plans to leverage their deep domain expertise to drive continued innovation and industry leadership,” says Deborah Mason, Chief Legal Officer of Allvue. “I look forward to working with the executive team to expand on Allvue’s success and delivery of best-in-class solutions for our clients."
Like this article? Sign up to our free newsletter Author Profile Related Topics Moves & AppointmentsO’Shaughnessy Asset Management launches new emerging markets strategy suite on Canvas
O’Shaughnessy Asset Management (OSAM), a quantitative asset management firm, has introduced a suite of emerging markets (EM) and developed ex-US ADR strategies on custom indexing platform Canvas.
OSAM develops systematic, custom portfolios that optimise for the goals of financial advisers and their clients. The new offering consists of both passive and active strategies in which the passive strategies deliver market replication, and the active strategies leverage proprietary quantitative research to optimise for risk-adjusted excess return.
“The search for alpha or excess return is leading investors to the emerging markets,” says Patrick O’Shaughnessy, CFA, Chief Executive Officer of OSAM. “Good companies headquartered in developing countries often trade at a steep discount relative to peers in developed countries. This is not due to a lack of fundamental earnings power. Research demonstrates emerging market companies show higher revenue growth and return on capital and have recently started outperforming their developed peers. The valuations and spreads indicate opportunity in this region, and we believe our methodology for selecting stocks lends itself well to sorting the winners from the losers.”
Nonetheless, investing overseas comes with inherent risk, specifically in emerging markets. OSAM’s factor-based emerging and developed markets strategies eliminate low performing companies across OSAM’s quality factor groupings and then weight into high performing companies based on valuation and momentum. Various risk controls are then applied to select and weight the most promising companies while maintaining an appropriate risk profile. As with all strategies in Canvas, advisers incorporating EM can decide if and how much active or factor exposure they want, and further customise the portfolio for environmental, social, and governance (ESG) considerations by excluding certain stocks and/or overweighting stocks of companies exhibiting positive actions. In addition, all taxable Canvas accounts can be optimised for after-tax return. Financial advisers can input tax budgets – used to transition and rebalance portfolios – to cap the tax bill of their clients.
“Emerging markets generally have a low correlation with developed markets. Passive or active exposure to emerging markets companies provides an added degree of portfolio diversification for investors in international developed and US markets,” says O’Shaughnessy. “We believe these new strategies are attractive due to their high expected return and diversification benefits. Continuing to release new strategies and factors to our opportunity set helps make Canvas a better product and furthers the dimensions by which advisers and their clients can build precisely what they want.”
Like this article? Sign up to our free newsletter Author Profile Related Topics Deals & Transactions InvestmentsDarwinex secures EUR3m in growth funding
Fintech, broker and asset management company Darwinex has raised EUR3 million to pursue its ambitious growth aspirations.
Leading investors in the round were Stefan Jaecklin and Pinorena Capital who were joined by Darwinex co-founders and a number of key employees in the company. Pinorena Capital, a fintech-focused investment company led by entrepreneur Illimar Mattus, has contributed with this first investment to supporting Darwinex expansion journey.
Darwinex is regulated by the FCA in the UK (Tradeslide Trading TechLimited - FRN 586466) and its latest financial figures show revenue for the financial year 2020 jumping by 72 per cent, exceeding EUR4.69 million.
Darwinex has recently launched trading in over 60 futures and all US single stocks across Trader Workstation (TWS) platform, in an effort to offer a higher quality product range and access to diversified markets. Darwinex's unique front-to-back fintech solution enables successful traders and small to medium-sized hedge funds to easily convert its trading strategies into investable assets. A one-of-a-kind product that serves as a tool for successful traders to scale their income and gain access to external investor capital, everything within Darwinex robust legal and technological ecosystem.
Successful traders also get access to DarwinIA, Darwinex monthly capital allocation of up to EUR90 million per annum, which supports strategies with solid fundamentals for generating returns.
"We are happy to see all co-founders and Darwinex team members participating in this round along with existing significant investor Stefan Jaecklin. We are also pleased to see Pinorena Capital joining the rank of shareholders and bringing not only capital, but also experience on how to scale and grow financial firms globally. We are now ready to bring our exceptional trading and capital-raising opportunities to a much larger global audience and disrupt the asset management industry," says Darwinex co-founder and CEO, Juan Colón.
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