Browsing: Legislation/Court rulings

Legislation/Court rulings

SCOTUS Leaves a Big Pharma Insider-Trading Conviction Intact

Jun 6th, 2019 | Filed under: Newly Added, Regulatory, Regulatory Environment, Legislation/Court rulings, The Alts Industry, Hedge Funds

On June 3, the US Supreme Court denied certiorari in the matter of Martoma v. US. This is the end of the line, then, for the appeals of Mathew Martoma’s criminal conviction and sentence. Martoma is a former portfolio manager for SAC Capital, now known as Point72 Asset Management. HeRead More

Mergers, Acquisitions and Unscrambling an Omelette

Jan 8th, 2019 | Filed under: Newly Added, Regulatory, Regulatory Environment, Event-Driven Hedge Funds, Legislation/Court rulings, The Alts Industry, Hedge Funds

Those who pursue alpha through the highways and byways of mergers are surely paying close attention to the AT&T/Time Warner litigation, which may end by considerably reducing the regulatory risk that firms making a “vertical” purchase in the digital/communications world will hereafter face. This is one of the points raisedRead More

10 Years Later: Reflections on the Madoff Meltdown

Dec 23rd, 2018 | Filed under: Due Diligence Process, Newly Added, Media Coverage of Hedge Funds, Insolvency, Regulatory Environment, Legislation/Court rulings, Alternative Investments in Context, Business News, The Alts Industry

It was just about 10 years ago (Dec. 10, 2008) that Bernie Madoff acknowledged to his sons, Mark and Andrew, that he had “absolutely nothing left” of the funds that had been entrusted to him; that the investment fund that bore his name was “just one big lie.” There isRead More

Some Clarity from the Delaware Supreme Court for Activists

Oct 18th, 2018 | Filed under: Hedge Fund Strategies, Equity Hedge Funds, Newly Added, Regulatory, Regulatory Environment, Event-Driven Hedge Funds, Legislation/Court rulings, The Alts Industry, Hedge Funds

The Delaware Supreme Court, on Oct. 9, upheld the Chancery Court’s dismissal of a buyout/squeeze-out related lawsuit. In the process, it issued an opinion that indicates that the room for activist investors to use litigation or the threat of litigation to derail controlling shareholder transactions may be quite small, andRead More

Justice Anthony Kennedy and Securities Law

Jul 10th, 2018 | Filed under: Newly Added, Regulatory, Regulatory Environment, Legislation/Court rulings, The Alts Industry

When Justice Kennedy announced that he is stepping down from the US Supreme Court, the profiles of his time on that bench said a good deal about abortion, homosexual rights, and other hot-button issues, but relatively little about Kennedy’s contribution to securities law. Yet it is worth remembering that heRead More

Judge Rose: Libya’s SWF Heads Knew What They Were Doing

Nov 1st, 2016 | Filed under: Newly Added, Institutional Investing, Regulatory Environment, Legislation/Court rulings, The Alts Industry, Institutional Asset Management, Allocating to Alts

The economic historians of posterity have their work cut out for them here. There are doctoral dissertations in the works already, no doubt. And in time several scholarly careers will hang on this.   Those scholars will have to make sense of the political developments in late-Qaddafi Libya, of the roleRead More

Fiduciary Duty, Excessive Fees, and Findings of Fact  

Aug 30th, 2016 | Filed under: Industry Size & Managers, Newly Added, Asset Managers, Regulatory Environment, Legislation/Court rulings, The Alts Industry

The Honorable Peter J. Sheridan, for the U.S. District Court for the District of New Jersey, ruled in favor of defendants, AXA Equitable and related entities, in a consolidated derivative action on behalf of mutual fund investors. This was a lengthy decision issued on August 25 that will reward attentionRead More

Federal Judge: Gingrich-Era Bars Not Easily Circumvented

Mar 3rd, 2016 | Filed under: Newly Added, Regulatory Environment, Legislation/Court rulings, The Alts Industry, Sales & Marketing in the AI Industry, Other Topics in Alts

Lucy Koh, the US. District Court judge for the Northern District of California, has granted judgment for a defendant, Schwab Investments, in a much-watched case. Koh has short-circuited litigation in which plaintiffs sought recovery for the style drift that allegedly afflicted a number of Schwab entities as the globe headedRead More

Challenges to Mergers: Not So Automatic Anymore?

Jan 31st, 2016 | Filed under: Newly Added, Regulatory Environment, Legislation/Court rulings, The Alts Industry, Hedge Funds, Relative Value Hedge Funds

The Delaware Court of Chancery has become increasingly hostile of late to lawsuits that challenge corporate mergers on fiduciary grounds. This is important, because the course of recent decades certain boilerplate sorts of lawsuits have become a regular feature of the mergers-and-acquisitions landscape in the U.S.  The law has allowedRead More

Insider Trading: Big-mouth Bankers and Remote Tippees

Jan 26th, 2016 | Filed under: Newly Added, Regulatory Environment, Legislation/Court rulings, The Alts Industry

The US Supreme Court has accepted an appeal from a Ninth Circuit decision on insider trading. Whatever the Justices do with this case, they will surely shed some light on the future of this sometimes very confusing body of law. Specifically: on January 19, the high court granted cert onRead More

Attack of the Activists: October Setback for NexPoint Still a Setback in November

Dec 3rd, 2015 | Filed under: Newly Added, Regulatory Environment, Legislation/Court rulings

A district court judge in Connecticut now says that upon further consideration “the Court should take Maryland law into account in determining whether NexPoint has made a sufficient showing to obtain a preliminary mandatory injunction.”Read More

M&A: Are the Delaware Courts Becoming Intrusive?

Nov 8th, 2015 | Filed under: Regulatory Environment, Legislation/Court rulings, Relative Value Hedge Funds

In 2014 it seemed possible that investment bankers could shrug off the Rural Metro decision as an anomaly; that is, as an example of how bad cases make bad law. But if a pending decision in the Supreme Court upholds the Chancery Court, they'll know they're dealing not with an anomaly but with a trend.Read More

Accounting for the Unreported Dead: A Matter of Opinion

Oct 20th, 2015 | Filed under: Regulatory Environment, Legislation/Court rulings

The Supreme Court announced this March that opinions that turn out to be wrong aren't enough to make out a claim for securities fraud. The twist in the Westland case was that it turned on the proper accounting treatment of reserves for death benefits that have been incurred but not reported. Read More

Supreme Court Decisions: Post-Announcement Hours & Days

Sep 10th, 2015 | Filed under: CAPM / Alpha Theory, Hedge Fund Strategies, Alpha Hunters, Alpha Strategies, Legislation/Court rulings, Alpha Seekers

Presumably the U.S. Supreme Court's decision, in December 2008, that states can in fact make and enforce tougher labeling standards for cigarettes than does the federal government was a negative for tobacco stocks. But did that mean that stock prices had already anticipated the decision before it happened? or that they immediately adjusted downward on the morning the decision was announced? Or ... neither of those? Read More

Javert Frustrated Again: This Time in the Second Circuit

Sep 8th, 2015 | Filed under: Insolvency, Emerging markets, Legislation/Court rulings

NML tried to get around the sovereign immunity of Argentina's Central Bank by arguing that it and the Republic were only one entity (the "alter ego" theory developed by the U.S. Supreme Court in an opinion concerning Cuba, in the 1980s), and that the one entity involved has waived its/their immunity. No dice. Read More

Administration, via Verrelli, Rolls the Dice on Insider Trading Issue

Aug 31st, 2015 | Filed under: Hedge Fund Strategies, Alpha Hunters, Legislation/Court rulings

Not all benefits are as tangible as a suitcase of cash, and the question of law for the Second Circuit, for the Ninth, and now perhaps for SCOTUS is: is friendship enough? how about regard for one's brother? Read More

When Underfunded Pension Funds Take Up Social Responsibility Investing

Aug 24th, 2015 | Filed under: Institutional Investing, Socially responsible investing, Legislation/Court rulings

In November 2014, Scott Stringer, New York City's Comptroller, launched a campaign he called the Boardroom Accountability Project. Bernard Sharfman makes a case that this BAP is a good example of much that is wrong with institutional/activist investing today. Read More

Aleynikov Again: State Jury Conviction Set Aside

Jul 8th, 2015 | Filed under: Algorithmic and high-frequency trading, Technology, Legislation/Court rulings

The judge's ruling setting aside the jury's guilty verdict is, of course, grand news for Aleynikov. It is also the curtain on a sometimes farcical spectacle. But let us not forget that there are issues of principle involved. Read More

Usury Law: Not Too far From the Madden Crowd

Jul 7th, 2015 | Filed under: Derivatives, Regulatory, Legislation/Court rulings

National and international markets have long been accustomed to the fact that various states in the United States have their own usury laws. Still, litigation in the 2d Circuit, arising out of New York, may have a substantial impact on credit markets and their derivatives. Read More

Dead Hand Proxy Puts: A Case Study

Jun 29th, 2015 | Filed under: Insolvency, Legislation/Court rulings

The creation of a so-called Dead Hand Proxy Put in the Healthways matter was especially egregious because it took place immediately after the board had agreed, under considerable shareholder pressure, that it would de-stagger its elections. The appearance then was that after giving up one defensive moat, the incumbents with the help of lenders immediately created for themselves another.Read More

Side Letters and the Caymans: The Latest

Jun 2nd, 2015 | Filed under: Hedge Fund Regulation, Alpha Strategies, Insolvency, Legislation/Court rulings

This Lancelot's adventures came to a bad end: defeated by the dragon of insolvency. But its official liquidator did win a victory over an investor seeking special treatment via a side letter.Read More

The STOCK Act Was Just For Show: Looking at the Inside of Insider Trading

May 17th, 2015 | Filed under: Hedge Fund Strategies, Legislation/Court rulings

What about the Congressionally employed leaker in a matter that looks like an insider tip to hedge fund traders? Is the SEC even allowed to ask? Shockingly, Congress wants special treatment for itself and its staff. Read More

The Forrest or the HFTrees? ‘Preferred Data Customers’

May 7th, 2015 | Filed under: Algorithmic and high-frequency trading, Hedge Fund Strategies, Legislation/Court rulings

It is of course possible to “question the wisdom of the SEC’s stance on this issue and its fairness to ordinary investors,” said the Judge in the Lanier/HFT decision. But the court isn’t in the business of second guessing the wisdom of regulation. Lanier's claims are dismissed. Read More

Bankruptcy Giant Harvey Miller: Rest in Peace

May 5th, 2015 | Filed under: Alpha Strategies, Insolvency, Legislation/Court rulings

One can argue with Harvey Miller, and with his old-school views about bankruptcy law, but now that he can no longer argue back one should show due deference. Read More

GOOG to Test Buy-on-Antitrust-Charge Theory

Apr 26th, 2015 | Filed under: Technology, Legislation/Court rulings, Alpha Seekers

Look for the EC sometime in the near future to bring a complaint about the contracts into which Google has entered with manufacturers that require them to construct the handsets in a way that favors Google’s famous search engine [over, for example, Microsoft’s Bing.] But consider that even this preliminary skirmish over comparison shopping might be a bullish sign for GOOG.Read More

Aleynikov’s Trial and My Cousin Vinnie

Apr 21st, 2015 | Filed under: Algorithmic and high-frequency trading, Intellectual Property, Legislation/Court rulings

A party seeking to employ an expert witness is supposed to let the other side know who the expert is in advance of trial. Fans of a classic Joe Pesci movie will remember that it isn't necessary to join the prosecutor in a hunting lodge. Read More

Tax & Election Seasons Create Alternative Altercations in the US

Apr 20th, 2015 | Filed under: Real Estate, Venture capital, Legislation/Court rulings, Partner accounting

As a general rule, politicians [mostly] on the Democratic side benefit by raising the issue of the taxation of carried interest during campaigns and then quietly letting it die, as their donors expect, when the legislature is actually working on tax bills. It's a way of signaling who is a "populist" and who isn't. Read More

Reflections on the MS Internet Explorer, R.I.P.

Apr 5th, 2015 | Filed under: Algorithmic and high-frequency trading, Technology, Legislation/Court rulings

The U.S. Department of Justice typically brings high-profile antitrust actions against 'monopolists' by piling its legal theories on top of dubious micro-economics. A recent announcement by Microsoft sends Faille down memory lane, to two 1990s era actions by the D of J against MS in the days when Bill Gates was still a great media ogre. Read More

The Supreme Court and Securities Fraud: No Barking Tuesday Night

Mar 31st, 2015 | Filed under: Legislation/Court rulings

The U.S. Supreme Court has just created a new, and confusing, standard for the trial of issuers who have made opinionated statements in offering documents. In certain contexts, to be determined ad hoc, the statement of an opinion, such as "we believe our practices are all lawful and value adding" can be a misleading omission of facts that might tend to the contrary conclusion. Read More

A Defeat, but Not a Rout, for Appraisal Arb

Mar 17th, 2015 | Filed under: Hedge Fund Strategies, Alpha Strategies, Legislation/Court rulings

The Delaware Chancery Court would apparently have preferred to stay out of the issue of valuation as it played itself out in the 2012 acquisition of by Permira. But it couldn't: the statute encouraging appraisal fights was too clearly worded for that. Read More

Crowdfunding: In the Gun Sights of Patent Plaintiffs

Feb 3rd, 2015 | Filed under: Regulatory, Crowdfunding, Intellectual Property, Legislation/Court rulings

The first of the three patents cited by the plaintiffs was filed at a time when the crowdfunding exemption movement was making a fair amount of noise on Capitol Hill, though it had not yet had tangible success. One might already entertain certain suspicions. Read More

Competing Bankruptcy Filings for Caesar’s: Third-Party Releases

Jan 25th, 2015 | Filed under: Private Equity, Insolvency, Legislation/Court rulings

A legal donnybrook has begun for control of Caesar's assets. An important side issue involves bankruptcy court treatment of non-debtors seeking release from alleged liabilities of their own, and a split amongst the appeals court circuits over such treatment. Read More

The SEC Takes a Limited View of Janus’ Limited View

Dec 29th, 2014 | Filed under: Derivatives, Regulatory, Legislation/Court rulings

A December 15 opinion by the SEC limits the significance of a Supreme Court decision of three years ago, and so at least pending appeal it broadens the applicability of the basic anti-fraud rule 10b-5 to the employees of an investment adviser. Read More

The Magnetism of Insider Trading: Part Two

Dec 28th, 2014 | Filed under: Hedge Fund Strategies, Alpha Hunters, Legislation/Court rulings

In Part One Faille discussed the Newman/Chiasson decision of a three-judge panel of the appeals court. In this follow-up, he discussed consequences, starting (but not ending) with the good news this offers Michael Steinberg. Read More

Yes, Speech is Free for Short Sellers, Too

Dec 23rd, 2014 | Filed under: Hedge Fund Strategies, Media Coverage of Hedge Funds, Legislation/Court rulings

The success of Wynn's lawsuit would have chilled free speech by short sellers. So let us take a moment to celebrate its quick demise at the hands of Judge Orrick. As a general rule, though, when a plaintiff quotes an expression from a transcript that, in fact, is immediately preceded by the word "not," and the plaintiff leaves the "not" out of the quote ... things are knotty. Read More

The Magnetism of Insider Trading: Part One

Dec 16th, 2014 | Filed under: Hedge Fund Strategies, Alpha Hunters, Legislation/Court rulings

A three-judge panel of the appeals court instructed the district court to "dismiss the indictment with prejudice as it pertains to Newman and Chiasson." Here we discuss why. in the second part, we'll discuss the likely consequences. Read More

Capital Markets, Derivatives and the Law

Nov 23rd, 2014 | Filed under: Derivatives, Legislation/Court rulings

Alan Rechtschaffen quotes two definitions of "moral hazard" in this book. The first, from Ben Bernanke, seems to get the book off to a rather awkward start. The second, from Zachary Gubler much later on, represents something of a recovery. Read More

Judge David Carter’s Valeant Decision: A Close Reading

Nov 11th, 2014 | Filed under: Hedge Fund Strategies, Alpha Strategies, Legislation/Court rulings

Carter's decision allows Pershing Square to vote its equity in Allergan in ways favorable to Valeant's planned purchase thereof. More is going on here than just another incident in the consolidation of the biopharm world. Read More

The Undead Enron Model Returns to the World above Ground

Nov 2nd, 2014 | Filed under: Commodities, Regulatory, Legislation/Court rulings, Energy

Enron was once the leader in a category of merchant traders that mediated in the world of energy commodities. Enron died, and banks largely took it over. Yet in spirit, at least, Enron is back. Read More

Two Types of Secrecy: Proprietary Trading Data and the Doomsday Book

Oct 26th, 2014 | Filed under: Legislation/Court rulings

Christopher Faille offers some personal thoughts about the Starr International/AIG litigation, and about the hush-hush Federal Reserve Doomsday Book. This leads to the deeper question of the openness of the U.S. as a society. Read More

Late September Bombshell from Judge Lamberth

Oct 8th, 2014 | Filed under: Alpha Hunters, Insolvency, Legislation/Court rulings

As the editorial page of the Wall Street Journal reminded us recently, investors sometimes gamble on politics. That is their right, but good capitalist hygiene is served when, once in a while, such a bet goes badly wrong. Read More

Is Liability Insurance an Estate Asset in Bankruptcy?

Sep 16th, 2014 | Filed under: Derivatives, Insolvency, Legislation/Court rulings

The Manhattan bankruptcy court has now granted individual defendants in the MF Global matter, including Jon Corzine, access to funds from their D&O insurance. But it wasn't easy for them to get here, and therein lies our moral. Read More

Merger Arb: Getting Your Stick to Where the Puck Will Be

Sep 8th, 2014 | Filed under: Performance, Analytics & Metrics, Alpha Strategies, Legislation/Court rulings

Christopher Faille speaks to Matt Porzio, the VP of Strategy and Product Marketing at Intralinks, about the data behind Intralinks' DFI. Read More

Herbalife’s Earnings and Ackman’s Timing: Part II

Aug 5th, 2014 | Filed under: Hedge Fund Strategies, Legislation/Court rulings

Herbalife (NYSE: HLF) may survive the tricky game it is playing. One critical point: even on the worst plausible reading of its behavior, Herbalife as a corporation or a stock isn't a chain letter. The products it offers its distributors and the public -- they are the chain letters. That's an important practical (though not a legal) distinction. Read More

Herbalife’s Earnings and Ackman’s Timing: Part I

Aug 4th, 2014 | Filed under: Hedge Fund Strategies, Legislation/Court rulings

Herbalife (NYSE: HLF) is playing a tricky sort of game right now: outlast the high-profile short. If its underlying business model is sustainable it can win that game. It may also be able to win, or Ackman may lose, even if the model isn't sustainable, although in that case Ackman's odds are obviously better. Read More

SIFMA Wins a Famous Victory: We Sort it Out

Jun 4th, 2014 | Filed under: Regulatory, Legislation/Court rulings

We catch up with litigation and administrative actions over the market data fees that exchanges are allowed to charge their customers, issuers, brokers, or dealers. One of the Lake Poets clues us in to what all the fighting means. Read More

Private Lawsuits Over Order Types Used to Facilitate HFT

Jun 2nd, 2014 | Filed under: Algorithmic and high-frequency trading, Legislation/Court rulings

HFTs and trading venues alike have worked hard to fit their practices into the Reg NMS framework. As a consequence, violations of NMS “are unlikely” Dolgopolov writes, “to provide a basis for civil liability of HFTs who use such orders because of their compliance – however formalistic – with this regulatory norm.”Read More

McGonagle Testifies to the Michael Lewis Hearings

May 15th, 2014 | Filed under: Algorithmic and high-frequency trading, Regulatory, Technology, Legislation/Court rulings

After some preliminaries, McGonagle got around to the central subject of his testimony, the Concept Release on Automated Trading that the CFTC had issued back in September 2013. Much of his testimony was designed to give Congress an inkling of the range of reactions the CR has since elicited. Read More

Rajaratnam Prosecution Sends a Signal: Traders Notice

Jun 25th, 2013 | Filed under: Hedge Fund Industry Trends, Risk management, Legislation/Court rulings

The arrest of Rajaratnam almost four years ago and the subsequent anti-insider enforcement activity doesn't of course come as news. But it raises fascinating questions about consequences: what have been the consequences amongst traders? Read More

The LIBOR Scandal: Not an Antitrust Issue

Apr 1st, 2013 | Filed under: Legislation/Court rulings

In an odd-seeming juxtaposition, a decision issued by the U.S. District Court in Manhattan on March 29, one sharply limiting the private plaintiffs' lawsuit against the banks involved in the LIBOR scandal, relies upon a precedent set by the Supreme Court in 1977 involving ... bowling centers. Read More