Hedge funds

John Gapper Europe’s dislike of bonuses weakens financial stability

March 18, 2013 4:21 pm by John Gapper

I struggle to see any logic behind the European Parliament’s latest initiative to crack down on financial industry pay, beyond a dislike of bonuses. The idea that investment funds should be treated similarly to systemically important banks has even less merit than the original idea.

The basis on which the EU proposed to rein in bank bonuses – despite UK opposition and criticism from supervisors including Andrew Bailey, the incoming head of the Prudential Regulation Authority – was that excessive bonuses gave bankers a perverse incentive to take risks. Read more

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Posted in Business, Finance |

Andrew Hill Why CEO shock at ‘cash for access’ is overstated

March 4, 2013 1:15 pm by Andrew Hill

There are plenty of interesting ironies raised by the news that investment banks are charging asset managers up to $20,000 an hour for access to chief executives, often unbeknown to the executives themselves.

One is that chief executives themselves are no strangers to “cash for access”. It’s a perennial political “scandal” that big corporate donors to political parties get to rub shoulders with the prime minister or his cabinet at private parties and dinners. The last time such a hoo-ha erupted, in 2012, the FT wrote that prominent City figures were “bemused at the outrage” surrounding the affair, describing it as “a healthy part of the democratic process”. One said: Read more

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Posted in Finance, Regulation |

John Gapper The irrepressible optimism of the young banker

October 1, 2012 12:36 pm by John Gapper

How many eager young bankers is too many?

The question is raised by an FT report that the number of MBA recruits to banking is falling, less as a result of the job being unpopular than the possibility it won’t last.

Tom Braithwaite notes that the former enthusiasm for investment banking has eased among MBA graduates:

“The Wharton school at the University of Pennsylvania, which bankers consider the “conveyor belt of Wall Street”, sent 16.6 per cent of its class to investment banks in 2011 compared with more than one in four in 2008. The pattern is similar at other large business schools.”

 Read more

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Posted in Business, Finance |

Andrew Hill Why hedgies are lobbying for lower walls

January 16, 2012 5:31 pm by Andrew Hill

“Secretive hedge fund manager” is one of those adjectival pairings to rank with “flamboyant impresario” and “introverted computer programmer” as a journalistic cliché. So when I read the headline “Hedge funds lobby SEC over secrecy rule” in Monday’s FT, I naturally assumed the hedgies wanted the US regulator to erect even higher walls around them. Not so.

Colleague Sam Jones points out that at least part of the myth of secretive hedge funds is constructed on the regulatory legacy of rule 502(c) of Regulation D. This “arcane piece of Depression-era legislation… defines how the modern hedge fund industry operates”, outlawing general advertising and solicitation by funds but also making them paranoid about talking to any “unqualified outsiders”. The Managed Funds Association, the funds’ US lobby group, has written to the Securities and Exchange Commission seeking its elimination. Read more

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Posted in Advertising, Finance, Regulation, US |

Andrew Hill Tax avoidance can’t buy you love

March 22, 2011 10:51 am by Andrew Hill

At last, a bit of perspective on tax avoidance.

Andrew Witty, chief executive of GlaxoSmithKline, says something is lost when companies switch tax domicile on a whim. The pharma boss tells The Observer:

One of the reasons why we’ve seen an erosion of trust broadly in big companies is they’ve allowed themselves to be seen as being detached from society and they will float in and out of societies according to what the tax regime is.

 Read more

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Posted in Business, Finance, Pharmaceuticals, Politics |

John Gapper Hedge funds keep on bringing in the money

July 22, 2010 5:21 pm by John Gapper

So much for the death of hedge funds.

Asset management, having been through a couple of tough years, is back to doing fairly well for itself – and that includes hedge funds – according to the Boston Consulting Group.

The industry as a whole is back from a nasty 2008 with global assets under management rebounding from $47,000bn in 2008 to $52,600bn. Even more importantly for those concerned, the post-crash squeeze on operating margins seems to be easing. Read more

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Posted in Finance |