LIBOR fixing could entitle investors to compensation

Barclays is reported to have settled two mis-selling claims involving allegations of LIBOR-rigging including the Graiseley Properties case. Similar allegations with respect to LIBOR manipulation have been made against Goldman Sachs in Unitech and set to go to the Supreme Court.

Those who consider that they may have been mis-sold LIBOR-related products could be entitled to compensation and should seek advice.

http://www.clydeco.com/insight/articles/case-update-court-of-appeal-ruling-in-libor-cases

http://www.clydeco.com/insight/articles/case-update-barlcays-settles-two-libor-cases

Barclays facing a US legal challenge over its dark pool

In what has evidently not been a good month for the banking group, New York Attorney General Eric Schneiderman has filed a complaint alleging that institutional investors were misled about the participation of high-frequency traders in the dark pool Barclays LX.

The complaint includes details of an alleged email exchange in which the head of equities responded to a comment that accuracy was less important than demonstrating capability with the memorable phrase, 'Yes! U smart!', banter unlikely to impress the judge.

Investors who traded securities in Barclays LX may find themselves entitled to compensation.

Vervoer settles fiduciary management dispute with GSAM

Dutch pension fund Vervoer sued Goldman Sachs Asset Management (GSAM) in 2012 for damages of EUR 250 million, in relation to alleged breaches of a fiduciary management agreement between the parties. The case has now settled out of court for an undisclosed amount.

UNPRI signatories reach records for 2013/2014

The United Nations announced that the number of signatories to the Principles for Responsible Investment which it supports had increased to more than 1,260 this year. The increase in the number of signatories is likely to make it more difficult for managers to resist requests from investors for their funds to comply with the Principles.

http://www.unpri.org/about-pri/about-pri/

UNPRI produces practical guidance on ESG

The UNPRI has also produced a practical guide to help managers develop a framework for the integration of economic, social and corporate governance (ESG) factors into their investment activities. Investors can use the guide to understand the different ESG practices being implemented in the market, which will facilitate more informed discussions with their GPs during both the fund selection and the monitoring process.

PRI_IntegratingESGinprivateequity_digital.pdf

Private equity fund fees and expenses remain in the spotlight

Following recent announcements by the US Securities and Exchange Commission that they have found widespread evidence of wrongful charging of fees and expenses in private equity funds, the pressure on private equity funds continues with a high-profile article in the New York Times.  The article focused in particular on the alleged practice of charging fees to portfolio companies for years after the sale.

Investors should be wary of undisclosed fees and charges in private equity funds and ensure that they have the right to redress if the manager makes an unauthorised profit from the fund. 

http://www.nytimes.com/2014/05/25/business/the-deals-done-but-not-the-fees.html?ref=business&_r=1

US Supreme Court ruling on Argentinian sovereign debt

Argentina might be facing a fresh default after the US Supreme Court refused to overturn lower court rulings ordering the state to pay billions of dollars to some of its creditors. Following the court’s order, creditors which opted out of having their debt restructured will need to be paid in full before the payment of all other bondholders.

The International Monetary Fund expressed concern with this decision which could have repercussions for future sovereign defaults, reducing the incentive for investors to participate in debt restructuring.  This could increase the counterparty risk attached to emerging market sovereign debt.

http://www.supremecourt.gov/opinions/13pdf/12-842_g3bi.pdf

Institutional investors increase their scrutiny of hedge fund managers

Prior to the financial crisis, institutional investment in opaque hedge funds was common practice.  Many institutional investors accepted a lack of transparency as a cost of securing the best managers, and many were invested in one of the Madoff funds. 

However, the days of 'black boxes' may be numbered.  London Pensions Fund Authority has reportedly pulled out of the Brevan Howard hedge fund due to a lack of transparency, and a recent report by CitiBank has found a general increase in the degree of scrutiny of hedge fund managers by institutional investors, sometimes on a position-by-position basis.

http://www.citibank.com/icg/global_markets/prime_finance/docs/Opportunities_and_Challenges_for_Hedge_Funds_in_the_Coming_Era_of_Optimization.pdf