On March 24, the FCA published a report which sets out its findings from a survey of hedge fund activity in the UK.
Key findings are:
On August 22, the FSA published a report on assessing the possible sources of systemic risk from hedge funds, setting out the findings of the March 2012 hedge fund survey (HFS) and the April 2012 hedge fund as counterparty survey (HFACS). Report.
Some of the key findings include:
The FSA intends to repeat the HFS in September 2012 and the HFACS in October.
On 29 May 2012, the FSA published a decision notice indicating that it had decided to fine Alberto Micalizzi, CEO of Dynamic Decisions Capital Management Ltd (DDCM), a hedge fund management company based in London, £3 million and ban him from performing any role in regulated financial services for not being fit and proper. The FSA also decided to cancel the permission of DDCM to conduct regulated business.
Between 1 October 2008 and 31 December 2008, the master fund (the Fund) managed by DDCM suffered catastrophic losses of over USD390 million, approximately 85% of its value. In the FSA’s opinion, in late 2008, to conceal the losses, Mr. Micalizzi lied to investors about the true position of the Fund and entered into a number of contracts, on behalf of the Fund, for the purchase and resale of a bond (the Bond contracts). The FSA believes that the bond was not a genuine financial instrument and that Mr. Micalizzi was aware of this when he entered into the Bond contracts. This is the biggest ever penalty for an individual in the case of non market abuse imposed by the FSA. Decision Notice for Mr. Micalizzi. Decision Notice for DDCM.
On January 18, the Financial Stability Oversight Council issued a study required by the Dodd-Frank Act entitled, “Study & Recommendations on Prohibitions on Proprietary Trading & Certain Relationships with Hedge Funds & Private Equity Funds”. The study recommends, among other things, that rulemaking agencies consider providing exceptions for certain funds that are within the Volcker Rule’s broad definition of “hedge fund” and “private equity fund”. FSOC Study.
