Byron Wien’s Farewell Commentary as Pequot shuts

Byron R. Wien, who joined Pequot in December 2005 as chief investment strategist after two decades as Morgan Stanley’s chief strategist, writes in an investor communication obtained by Opalesque that "What has happened to Art and the firm is sad. I have been in the investment business for close to half a century and I have never worked with a group of finer professionals. We will all go on to other challenges...."
Here is the full text: "Back in the 1970s, Art Samberg, the founder of Pequot, and I were partners at a small Wall Street money management firm. We were both analysts and portfolio managers, but Art had a special talent for technology stocks and special situations. He also managed something called “The ‘57’ Account”, named after Heinz’ 57 varieties because its holdings leant new meaning to the concept of diversification. I left the firm in the mid-1980s to go on to two decades as a strategist at Morgan Stanley and Art left a year later to become an investment management entrepreneur.
When Art started his hedge fund in 1986 I was a charter investor because I wanted to benefit from what I knew by then was his special talent for stock picking. Over the years I referred many friends to Pequot because I believed that Art not only had the ability to manage money well, but also could attract other able investment professionals and guide them as the firm grew.

For full story : http://www.opalesque.com/53374/Byron_Farewell_Commentary_as_Pequot_shuts374.html

Of the major current regulatory developments, the EC Directive is attracting the most controversy

In the last couple of months, the two major developments on the regulatory front were the European Commission’s Directive draft, and the Obama administration’s general overhaul of regulations for the financial system. While the later was generally welcomed, the former has raised much controversy.
The controversial Directive The EC Directive, which first draft was announced on 29th April, and which will have to be approved by the European Parliament and the European Council later this year and be implemented in two years, is thought to be a political response to the credit crisis, heavily influenced by the EU's socialist group, in particular Danish ex-prime minister Rasmussen. As the draft was issued soon after the G20 summit, the European Commission might have tried to get in first (the G20 directive has not been finalised yet.)
The Directive proposes to regulate Alternative Investment Fund Managers (AIFM) established in the European Union who manage more than Eur100m, by authorising and regulating them, demanding more transparency and appropriate governance standards, allowing them to market their funds in the EU, and grant access to the European market to foreign funds after a transitional period of three years.
Infuriated reactions in the UK Seeing more oversight, signs of protectionism and incompatibility with the existing rules, the draft angered the UK fund management population in general. Some of the largest hedge funds warned the Treasury that they would leave Britain unless the draft Directive was drastically modified. The industry association AIMA gathered around a number of luminaries (such as BlackRock, Brevan Howard, CQS, DE Shaw, Fauchier Partners, Lansdowne Partners, Man Group, Marshall Wace) to fight and lobby against it.

Full story: http://www.opalesque.com/53231/Of_the_major_current_regulatory_developments_the231.html

Ernst and Young survey: Reputation the biggest risk for asset management risk managers

Opalesque Industry Updates - Major flaws identifying counter party risk exposures, finds Ernst & Young
Reputational risk is the biggest concern for UK asset management chief risk officers (CROs) followed by the hostile regulatory environment and greater client scrutiny, according to new research published today by Ernst & Young. But CROs are finding that they are not being given the information they need to adequately advise and protect their business nor are they being included in business processes, according to the poll of 23 CROs from some of the largest asset management firms in the UK.
Over a third of respondents can launch a new product from idea in up to eight weeks, while it takes 22% between three to six months. However, only 30% of the CROs thought that the process for pricing new risks into the product was adequate, compared to 48% who didn’t.
Dr Anthony Kirby, director in the Ernst & Young regulatory and risk management practice, comments: “Asset management firms are facing increasingly severe risks as the recession continues. Failing to get CROs involved in new product development or the strategic direction process could result further down the line in disgruntled clients and investors or worse. CROs play a hugely important element in ‘fine-tuning’ products. Their role is really business critical in the current environment.”
Model variations but drive to improve reporting
With market, liquidity and valuation at the top of the agenda for most firms, the report finds a wide variation in ex-ante risk modeling. While the vast majority of those polled undertake such modeling, 26% said they didn’t and 9% didn’t know.
Full story: http://www.opalesque.com/IndustryUpdates/251/Ernst_Young_survey_Reputation_the_biggest_risk251.html