Rediculous News - Thread of nonsense to remind us to keep our sense and sensability

Thread of nonsense to remind us to keep our sense and sensability

Damn... Can't fight with blood like that over something material.

Tax Evasion Dogs Greece
by Sebastian Moffett and Alkman Granitsas


Greece has one apparently simple option for reining in a budget deficit that
has roiled financial markets: Clamp down on widespread tax evasion,
which costs the country an estimated €15 billion ($20.5 billion) a
year, an amount that would pay off a big chunk of the budget deficit.The trouble is, tax evasion in this Mediterranean country is extremely difficult to eradicate. Trying to cope with its budget problems, Greece announced new austerity measures Tuesday.

Finance Minister George Papaconstantinou said public-sector salaries would be
frozen and supplemental incomes for civil servants cut by an average of
10%. Salaries and bonuses for the prime minister, senior government
officials and officials at state-owned enterprises will be frozen, and
under some conditions reduced.The measures would save some €850 million this year, said Mr. Papaconstantinou.

The government also announced a higher marginal tax rate of 38% on people earning more than €40,000 a year, up from about 25%.In addition, dozens of tax loopholes and special rebates will be
eliminated, and taxes will be increased on dividends and offshore
companies. The tax measures would yield some €1.2 billion in revenue
this year, the government said.The Greek shadow economy, which
is made up of unreported income, was 25.1% of gross domestic product in
2007, according to Friedrich Schneider, a professor at Johannes Kepler
University in Linz, Austria.The shadow economies of Spain,
Portugal and Italy were all around a fifth of GDP. That compared with
just 11.8% for France and 7.2% for the U.S., he said.

Trying to explain the rampant tax evasion, Prof. Schneider said countries like
Spain, Portugal and Greece have had continuous democracies only since
the 1970s, and people aren't used to governments representing the
public interest."In most of these countries, what matters is
your family. … There is less of a sense of duty towards the state,"
said Alberto Alesina, a professor of political economy at Harvard
University. "Evading taxes is something you can freely talk about—and
be proud of—at a dinner party in these countries."Media reports are rife with accounts of corruption among tax officials.

Meanwhile, in a government survey last year of 150 doctors in Kolonaki, an
upmarket Athens neighborhood, half of the doctors said they were paid
less than €30,000 a year. Thirty said they made less than €10,000."It
is not possible for a taxpayer to declare an income of €15,000 while at
the same time maintaining a big house, a big car, a recreational boat
and sending his kids to private school," Mr. Papaconstantinou said
Tuesday.The Athens doctors association didn't respond to requests for comment on the pay survey.A
taxi driver last week offered a business traveler a €50 receipt for a
€40 ride, to enable the traveler to overclaim expenses to his company.

The condition was that this receipt be scribbled on a piece of paper
and not a printed receipt from his meter, which would result in the
payment being registered.Dimitris Mavrogiannis, 58, who owns an
auto-paint shop in the New Kosmos district of Athens, says he usually
issues receipts, especially as a lot of his work is for insurance
companies, which insist on them."In the majority of cases, I do
issue receipts," says Mr. Mavrogiannis,. "But sometimes people ask for
a discount on the [value-added tax] and I say, 'OK.' "Such tax
dodging is a problem now, as Greece's budget deficit was likely around
13% of GDP in 2009. which led to a selloff of Greek government debt and
boosted the interest rate the government has to pay.

Economists say the only way to solve Greece's tax problems is through incremental
measures. Greeks say they would like a fairer system."I work for
a large Greek construction company … but of course, I have also done my
own jobs on the side, off the books," says Alexandros Foukis, 27, a
building contractor. "What the government needs to do is provide
incentives to people to issue a receipt."

Via FT Alphaville:

In praise of market discipline EU leaders: only 8 years behind the curve on currency swaps
Posted by Izabella Kaminska on Feb 15 18:41. 2 comments.


As noted previously on FT Alphaville, Greece’s newly-controversial
currency-swap is by no means a new story: Risk magazine covered the
deal as far back as 2003. That European Union authorities have only now requested information
about the deal presumably tells us more about the inner workings of
Brussels than it does about Greek finances. More…


As noted previously on FT Alphaville, Greece’s newly-controversial currency-swap is by no means a new story: Risk magazine covered the deal as far back as 2003.
That European Union authorities have only now requested information about the deal presumably tells us more about the inner workings of Brussels than it does about Greek finances.
Indeed, Finance Minister George Papaconstantinou was quick to point out
there was nothing untoward or illegal about a sovereign government
taking out an exotic financial instrument with a Wall Street
counterparty, especially not back in the heady days of 2002.
In fact, the practice was so prevalent that Standard & Poor’s covered the issue in a note — published in 2002 — entitled “Accounting for Innovation: Treatment of Off-Balance-Sheet Public Sector Financing Operations”.
As they rather presciently observed, “efficient” accounting was just
as much the norm on a government level as it was a corporate one back
then (our emphasis throughout):

As a result of recent corporate credit quality problems,
the scrutiny of accounting policy and practices among listed companies
has become acute.
Similar issues, albeit on a much more modest scale, have also
started to emerge regarding some governments’ accounting procedures.
Trying to take advantage of the leeway that public accounting rules
allow is a legitimate objective. Governments facing strong
pressures to reduce or contain public sector borrowing requirements
will be particularly inclined to use all the freedoms that accounting
rules permit.
Although this is not a uniquely European phenomenon, the Maastricht
criteria on debt and deficits have galvanized many European governments
to embark on more innovative approaches to bring deficit and debt
levels below the critical levels.
Although public accounts provide fewer opportunities to choose
accounting techniques than in the corporate sector, a gamut of
innovative financial operations has sprung up over recent years, which
appears to be increasingly important for public sector funding. Just as
corporations use an array of admissible (and sometimes inadmissible)
accounting measures to improve and smooth reported earnings to appease
shareholders, governments increasingly care about constant, if gradual,
improvement of reported fiscal performance.

And here, according to S&P, are the most common ways that governments went about smoothing out their revenue streams:

If innovative operations were to impact future fiscal
flexibility in a more substantial way than in the past, ratings
implications would be possible. To date, however, Standard & Poor’s
has not revised its ratings or outlook on any central, regional, or
local government solely on the basis of these transactions. The
transactions covered in this report are:
· Securitization of future public sector receipts;
· Swaps that have borrowing characteristics;
· Private financing initiatives, through which public investment and operating expenditures are contracted out; and
· The creation of public nonconsolidated borrowing institutions.
Governments can derive various benefits from these
techniques. In particular, smoothing revenue streams can improve the
public authority planning and spending process. As will be
argued below, the availability of the transactions mentioned above can,
if only in the short term, enhance fiscal flexibility, providing more
opportunities to actively manage cash flows.
Structured transactions can attract new investors who were not
previously direct investors in government debt, and cost efficiency
could improve where private sector management leads to better public
service delivery. At the same time, however, shifting debt from the
government’s balance sheet in these ways can just as easily indicate
fiscal pressure.

And on swaps in particular:

Debt management practices of public entities have become
increasingly sophisticated. This is true not only of sovereign issuers,
but also of many local and regional governments. Highly skilled finance
professionals now typically staff debt management offices and operate
with a clear mandate to minimize risk-adjusted borrowing cost.
Although this process is in no way limited to Western
Europe, the advent of the euro, with its wider market for
euro-denominated products, has accelerated an existing trend.
Swaps have become a common feature of highly developed debt strategies,
for example to increase liquidity in public issues or manage currency
and interest-rate risks. In the overwhelming majority of cases, swaps
are used as hedging instruments that should not put fiscal flexibility
at risk.
Partly as a result of using swaps, however, debt managers have often
been successful in reducing the average cost of government borrowing
and smoothing interest payments and amortization schedules, thereby
contributing to fiscal improvements. Swaps have many purposes, which
can range from the straightforward to the very complex.
Uneven transparency in reporting information on government
use of derivative instruments provides debt managers and politicians
with an opportunity to actively manage their headline budget
performance. Such operations include zero-coupon swaps without applying
accrual accounting.
This swap will eliminate any interest obligations until maturity,
when all accrued interest will be paid out at once. Another form of
off-market-rate transaction occurs when a public debt manager enters a
domestic interest rate swap, receiving fixed but paying floating rates,
and requesting that a fixed payment be lower than the rate available in
the swap rate at the time.
As this swap has a negative value for the public borrower,
compensation will consist in an upfront payment from the swap
counterpart. This operation, if not amortized over the life span of the
swap contract, could undermine the accruals principle of recording
financing costs. In effect, both described transactions constitute only
borrowing: the public debtor receives a positive cash flow today at the
cost of higher outlays in the future.

The key takeaway from S&P’s report being:

The effect on fiscal flexibility is clear: an
immediately improved liquidity position is traded for higher
inflexibility in the future. Recorded headline debt ratios
decline today if the “borrowing component” of the off-market swaps is
not recorded as debt and used to reduce current explicit borrowing.
Fundamentally, nothing has changed, however. Whether
or not the implicit (or “camouflaged”) borrowing via derivatives is
included in official debt statistics, it is real and needs to be
serviced during the remainder of the derivative contract. This sort of
window-dressing has no impact on underlying fiscal flexibility. There
remains the risk, however, that the short-term liquidity relief
afforded by the implicit borrowing could hamper government resolve to
implement structural reforms that put public finances on a more solid
and permanent footing.
In sum, de facto borrowing swaps do not have a positive impact on fiscal flexibility. If
anything, they help to undermine transparency and, therefore,
jeopardize trust in official accounting. Where uncertainty about the
effective debt exposure of a government increases, an additional risk
spread on the concerned issuer’s securities might be demanded by
investors, thereby potentially defeating even the intended short-term
purpose of improving the cash flow.

Absolutely nothing that Brussels should have been worrying about nearly a decade ago, then…
Non European-Union authority types can peruse the full note in the Long Room. European Union types should, frankly, have read it eight years ago.

Normally I would post this in the Morality thread but this is just too funny... this guy loves to hide out in Europe

Via. HFN:

Jig is up For Hedge Fund Fugitive

A fugitive conman who ran a bogus hedge fund has been arrested in Poland. A U.S. Embassy Web site announcement said Polish National Police arrested Alexsander Efrosman, also known as Alexander Besser, in Krakow
Saturday.

Efrosman is a convicted white collar criminal whose hedge fund scam twice ran afoul of the CFTC-and twice earned Efrosman a federal court conviction, first in 1998 and later in 2005. But Efrosman, a Staten Island, N.Y., resident, has proven unwilling to face up to his wrongdoing.


His latest flight from justice dated back to 2005, when he lammed it after a federal court ruled his AJR Capital and Maxim Fund bilked $5 million in investor capital.

Efrosman had returned to criminal behavior just after his release from prison, where he had been sent in 2000. Earlier, in 1998, Efrosman, before he could be sentenced to prison for running a similar hedge fund scheme, fled to France, where he was later arrested and extradited. His subsequent prison sentence lasted from 2000 to 2003. The FBI had been heading the hunt for Efrosman, the U.S. Embassy said.

Typical Regulators with their heads up their arses:

-----



Third Point Out From Under SEC Scrutiny
Activist hedge fund firm Third Point said a 2008 SEC investigation into whether the firm improperly communicated with other hedge fund managers has been dropped.

In a June 11 letter to investors, Third Point manager Dan Loeb wrote, "We remain registered with the SEC, and believe that the exacting standards of compliance to which we adhere are consistent with industry best practices."

The letter was posted on financial blog Dealbreaker.com.

At the time the investigation was launched, Third Point said the communications were the normal give-and-take among professional managers about investment ideas.

Government regulators have stepped up their scrutiny of what might or might not be considered acceptable communications between hedge fund firms.

However, the regulators have also been caught flat-footed when it turned out that they didn't have their timeline straight.

At the start of this year, when Greece went into financial crisis and the euro was plummeting, the Justice Department was reported to be looking into whether executives at some of the biggest hedge fund firms such as SAC Capital Advisors, Greenlight Capital and Soros Fund Management met at a dinner to discuss the situation.

But that turned out to be a red herring, as the dinner took place as the European Union was moving to stabilize the situation and the euro was climbing again.

"A hero" and "captivated his audience" LOL


----


Rogue SocGen Trader Invented Fake Hedge Fund Client
Jerome Kerviel, the former Societe Generale trader who the French bank claims cost them about €4.9 billion ($6 billion) in his 2008 unauthorized trades, reportedly said at his trial he made up a hedge fund client to explain what he was doing.

Kerviel testified at his criminal trial in Paris that he made up "Matt," a hard-driving, rugby-playing hedge fund client, when a broker questioned his trading strategy, according to Reuters.

Kerviel said it was "Matt" who put pressure on him to take risks at the trading desk, Reuters reported.

SocGen has claimed that Kerviel acted alone. The 33-year-old ex-trader has said he was trading at the urging of his superiors who were happy when he was making money and only turned against him when his bets went wrong.

The young trader's trial has been on for almost a week and has captivated his European audience. Kerviel has become something of a folk hero, viewed as an anti-establishment figure.

He faces five years in prison if he is convicted.

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June 30, 2010
Drink. Trade. Refill. Lose $10 Million.
By JULIA WERDIGIER
LONDON — Alcohol-induced behavior has produced many unintended consequences, but pushing up the global price of oil and losing $10 million must rank among the most novel.

Britain’s financial regulator disclosed on Tuesday that Steven Noel Perkins, a former oil futures broker, single-handedly engineered a jump in the price of oil a year ago and cost his firm millions of dollars with a string of unauthorized trades after a weekend of heavy drinking.

Mr. Perkins had just returned from a liquor-soaked golf weekend with colleagues in June of last year when he sat down in front of his laptop at his home east of London and started to place bets on Brent crude futures, according to a report by the Financial Services Authority. He continued to drink and place bets through the night, and by the morning of June 30, Mr. Perkins had placed more than $520 million worth of trades, at one point pushing the price of oil to $73.05, an eight-month high. The trades by Mr. Perkins were the main reason the price gained about $1.65 a barrel in just over two hours in the middle of the night, according to the report.

“Mr. Perkins’s explanation for his trading on 29 and 30 June is that he was drunk,” the F.S.A. said. “He claims to have limited recollection of events on Monday and claims to have been in an alcohol-induced blackout at the time he traded.”

Just before 7 a.m., Mr. Perkins realized what he had done and tried to unwind his positions. To gain time he sent a text message to his boss at PVM Oil Futures saying that a relative was ill and he would not be in the office that day.

When a back-office clerk called Mr. Perkins at 7:45 a.m. on June 30 to ask for details about the trades, Mr. Perkins lied and said he made them on behalf of a client. PVM takes commissions on fulfilling orders from its clients, which are banks and other institutions, and does not trade for itself.

But by 10 a.m., PVM, where Mr. Perkins had worked since 1998, had discovered that his trades were unauthorized and suspended his access to the trading system. The trades cost PVM almost $10 million, the company said last year.

The F.S.A. fined Mr. Perkins about $107,600, for market abuse and barred him from working in the financial services industry for at least five years.

The regulator reduced the fine from about $224,000 to avoid causing Mr. Perkins “serious financial hardship.”

Mr. Perkins joined a rehabilitation program last year and has stopped drinking, the F.S.A. said.


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Too funny.....

========================================================
FT Alphaville:

Wall Street justice, Texas-style
Posted by Tracy Alloway on Jul 05 13:00.
Things we learned this weekend:

The cost of the financial crisis to the state of Texas is estimated to be $18bn.
There is a “well-recognised” doctrine of “Quasi Sovereign Interest” for US states.
A Texan lawyer wants to sue Wall Street for causing the crisis.
So you can add the Lone Star state to the growing of list of those out to claim damages from Wall Street.

Barbara Ann Radnofsky, a candidate for Texas Attorney General, says she wants to file suit against big banks, the big three rating agencies, as well as AIG, for hurting the state’s coffers, and its inhabitants’ financial wellbeing. (And yes, there’s more than a bit of political grandstanding to this — Radnofsky uses the suit in part to egg on her “tired incumbent” opponent, but she is pressing for other states to sue).

Here’s a summary:

1. Plaintiff State of Texas (“the State”) sues Goldman Sachs Group, Morgan Stanley, UBS, Merrill Lynch/BOA, Citigroup, Credit Agricole, Credit Suisse, Deutsche Bank (“the Banks”), Moody’s, Standard and Poor’s, Fitch (“the Ratings Agencies”), AIG Insurance Company (AIG) and other John Doe defendants for causing financial crisis and physical harms; recession; unemployment; home and wealth loss; forced cutbacks in a wide variety of critical areas, including medical care, social services, and environmental protection. Damages to the State include but are not limited to reduction in the value of state investments and the increased costs to governmental units, including increased insurance costs to Texas governmental units seeking to issue bonds whose reputation has been unfairly impaired. Defendants caused budget shortfall of at least $18 billion to the State of Texas. The environment, health and wellbeing of the State and its citizenry are directly harmed. The first manifestations to children and other vulnerable citizens include hunger, disease and medical complication.

Reminds me of the Thought police from George Orwell's 1984...I guess I'm not cultured enough to understand such a thing like the Internet Police.

====================================================================================
FT.com:

Chinese micro-blogging sites have become the latest target of Beijing’s internet police, which have ordered companies providing Twitter-like services to step up monitoring and purge sites of politically “sensitive” words and expressions. In the last week, most of the largest and most popular micro-blogging websites in China have been shut down for “maintenance” or have switched to “beta” or “testing” versions. These backup websites are being used while the companies “strengthen their self-censorship systems” and remove all politically sensitive content under orders from Chinese internet authorities, according to employees at some of those companies.

The micro-blogging site run by the popular Chinese portal Netease was unavailable on Wednesday , replaced with a notice saying the site had been “under maintenance” since 7pm on Tuesday. The Twitter-like service provided by leading internet portal Sohu was also closed for “maintenance” over the entire weekend but reopened on Monday morning. Other companies that have switched to “beta” or “testing” versions of their micro-blogging sites include Sina, which claims to have 20m registered micro-bloggers, as well as Tencent, QQ and even the micro-blog site of the People’s Daily website, the official mouthpiece of the Chinese Communist Party.

Popular US micro-blog and social networking sites including Twitter, Facebook and Youtube have all been banned in China since last year but domestic imitators have been allowed to flourish, provided they observe the government’s stringent self-censorship requirements. “In some places the local Public Security Bureaus have started their own official micro-blogs which shows how the government understands the importance of this new communication channel,” according to Hu Yong, associate professor of journalism and communications at Peking University. “The government is strengthening its censorship over micro-blog contents but it’s very unlikely it will close them all down.”

The power ofmicro-blogging in China’s tightly controlled media environment has been highlighted by a case in recent days in which a popular crusading micro-blogger raised serious questions about the integrity of one of China’s most prominent business executives. Tang Jun, a former President of Microsoft China and reportedly the highest-paid executive in China, was forced to admit he did not receive a degree from the prestigious California Institute of Technology after accusations he falsified his resume were posted by micro-blogger Fang Zhouzi, known for his online campaigns against academic plagiarism and fraud in China. The case has stirred up a frenzy on the Chinese internet and forced Mr Tang to reveal his “doctorate” came from an unaccredited US institution that recently changed its name after it was accused by US media of being a “diploma mill” that does not provide any actual classes.

Propaganda authorities have since clamped down on reporting of the case after some Chinese media published lists of other prominent Chinese figures who received degrees from similar institutions, including government officials, executives and judges.

Batman wrote:

Reminds me of the Thought police from George Orwell's 1984...I guess I'm not cultured enough to understand such a thing like the Internet Police.

====================================================================================
FT.com:

Chinese micro-blogging sites have become the latest target of Beijing’s internet police, which have ordered companies providing Twitter-like services to step up monitoring and purge sites of politically “sensitive” words and expressions. In the last week, most of the largest and most popular micro-blogging websites in China have been shut down for “maintenance” or have switched to “beta” or “testing” versions. These backup websites are being used while the companies “strengthen their self-censorship systems” and remove all politically sensitive content under orders from Chinese internet authorities, according to employees at some of those companies.

The micro-blogging site run by the popular Chinese portal Netease was unavailable on Wednesday , replaced with a notice saying the site had been “under maintenance” since 7pm on Tuesday. The Twitter-like service provided by leading internet portal Sohu was also closed for “maintenance” over the entire weekend but reopened on Monday morning. Other companies that have switched to “beta” or “testing” versions of their micro-blogging sites include Sina, which claims to have 20m registered micro-bloggers, as well as Tencent, QQ and even the micro-blog site of the People’s Daily website, the official mouthpiece of the Chinese Communist Party.

Popular US micro-blog and social networking si...judges.

big brother

Former HF Manager Sent to Hospital Following Alleged Assault
A one-time hedge fund manager was allegedly beaten by his wife, requiring him to seek treatment at a local hospital.

Susan Van Cook was taken into custody by Rye, N.Y. police last weekend on charges of misdemeanor assault and endangering the welfare of a child, FINalternatives cited in the Journal News.

Joseph Van Cook, a former manager with the hedge fund firm Pritchard Capital Partners, was reported to have late-traded mutual funds from 2001 until 2003.

Susan is alleged to have hit her husband with a full bottle of wine in his head. Susan is also accused of having bitten her husband's arm. Joseph's injuries were said to have required both staples and stitches to treat.

Det. Lt. Joseph Verille of the Rye Police Department did not return a message left by HedgeFund.net seeking confirmation and additional details about the report.

Snapman wrote:

Former HF Manager Sent to Hospital Following Alleged Assault
A one-time hedge fund manager was allegedly beaten by his wife, requiring him to seek treatment at a local hospital.

Susan Van Cook was taken into custody by Rye, N.Y. police last weekend on charges of misdemeanor assault and endangering the welfare of a child, FINalternatives cited in the Journal News.

Joseph Van Cook, a former manager with the hedge fund firm Pritchard Capital Partners, was reported to have late-traded mutual funds from 2001 until 2003.

Susan is alleged to have hit her husband with a full bottle of wine in his head. Susan is also accused of having bitten her husband's arm. Joseph's injuries were said to have required both staples and stitches to treat.

Det. Lt. Joseph Verille of the Rye Police Department did not return a message left by HedgeFund.net seeking confirmation and additional details about the report.

Maybe he was managing the savings of the household...

Sauros wrote:

Maybe he was managing the savings of the household...

LOL! better watch yourself my friend ;-)

Divorce, Hedge Fund-Style
It's hard enough for couples in the public eye to go through a bitter divorce, but when they run a business together, things can go from bad to worse.

Such appears to be the case with the husband-wife team that founded London-based Ikos, one of Europe's oldest hedge fund firms.

Martin Coward and Elena Ambrosiadou founded Ikos in 1992. Coward, who holds a Ph.D. in mathematics, gave the fund a quantitative strategy focus and, by 2009, it had about $3 billion in assets under management.

But feuding between the couple over the firm's assets and an alleged affair of Coward's has cost the firm investors, according to The New York Post, with AUM sinking to about $1.95 billion.

Things got so bad that when Coward was on vacation, his wife fired his team of researchers, The Post said. She also had police seize the firm's private jet, forcing Coward to fly back from holiday on a commercial flight.

Coward left Ikos at the end of 2009 to start up his own firm.

Of all things to buy with stolen money….



-----

WG Trading/Hedge Fund Manager Pleads Guilty
A hedge fund manager who took investor money and spent it on personal luxuries including a teddy bear collection pleaded guilty to fraud.

Paul Greenwood, 62, a principal with broker-dealer WG Trading and hedge fund firm Westridge Capital Management, pleaded guilty in federal court in Manhattan Wednesday to taking about $554 million from investors.

Greenwood could face up to 85 years in prison, but he is cooperating with the government against his partner, Stephen Walsh, 65, who has also been charged with fraud, in hopes of a more lenient sentence.

Greenwood and Walsh used the money to fund a lavish lifestyle, including multi-million dollar homes, a horse farm and the Steiff teddy bears that Greenwood collected, according to court documents.

The two men also had a minority stake in the New York Islanders, a professional hockey team.

Ex-Hedge Funder Turned Madam Might Get on NY Ballot
Kristin Davis, a former hedge fund executive who ran an escort service allegedly frequented by ex-New York State Governor Eliot Spitzer is hard on track to be the next governor of the Empire State herself.

Although it's highly unlikely that Davis will make it to the statehouse, she does have a shot at getting her independent party on the ballot.

That would be fine with Davis.

"If we can get this party permanent ballot status, then I think we may have a shot at the gay marriage equality issue," Davis told HedgeFund.net. "I can think of nothing that was better for my life than to bring about equality."

Her Anti-Prohibition Party is not only for marriage equality, it's also for legalization of marijuana, casino gambling and, you guessed it, prostitution.

Davis's prostitution business was not the Emperors Club, the service Spitzer used when he was caught as "Client No. 9," during an official investigation. Rather, she ran a competing business, which she alleged Spitzer also frequented.

Spitzer resigned the governor's post when the investigation became public.

Although she claims to be more libertarian than anything, Davis didn't get the backing of the state group, so she made up her own party.

Davis credits her early work in the back office of hedge fund firms in California (where she is from) and the New York area with giving her the gumption to do the impossible.

When she started in the business 15 years ago, her boss at her first hedge fund job told her, "the greater the risk, the greater the reward."

"And that's the mentality I've always operated my life on," she said.

The reward for her running a prostitution business was four months in jail and a forfeiture order which she says lost her all her profits.

Still, Davis says, she served her time and lost her money, something she says Spitzer never had to do.

"I wasn't responsible for 18 million people of an entire state," Davis said.

Davis needs 15,000 signatures by Aug. 17 to get her party on the ballot for the primary. She says she already has 30,000, but she still will need 50,000 votes to give her party permanent status on the state ballot.

Hedge funds, investors and divorce lawyers - it's a match made in heaven

Hedge funds are renowned for staking huge amounts of money on esoteric financial instruments, but their latest move is less arcane, if just as imaginative: betting on high-stakes divorces. Funding commercial and individual litigation in exchange for a stake in the final payout is the latest trend in an industry that is battling to recover the above-average returns it once offered to investors – for hefty fees. After they have lost almost half the $2 trillion they had under management two years ago, alternative investment firms are looking more alternative than ever.

Mayfair-based Harbour Litigation Funding is financing the legal battle of Michelle Young, wife of the property tycoon Scot Young, who claims to have lost most of what was once a £400m fortune. "Collectively the Harbour team has funded 66 general commercial cases since 2003. While the Young case is a divorce matter, in truth it is about asset recovery and has the same elements as a commercial dispute, and as such it fits with the core business that we undertake," Harbour says.

Some funding parties in divorce cases require between 20% and 30% of the final payout for taking the risk, says Christian Stuerwald, head of the UK office of Allianz Litigation Funding, which is part of the German insurance group Allianz. His team has already funded divorces in Germany and Switzerland. "When we opened the office here two years ago, people told us banks provided loans, but that source of funding seems to have dried up, so there's potentially more business to be done by litigation funders," Stuerwald says.

With lending more constrained as banks try to shore up their balance sheets, and acrimonious divorce cases often costing more than £50,000 each in legal fees, clients may have no other option than to turn to litigation funds. Raymond Tooth, the high-profile celebrity lawyer popularly known as "Jaws", says that people will consider litigation funding "if there's no recourse – if you had a case where you might get nothing or you might get a lot, or in a case where nobody knows where the money is – in which case a bank wouldn't lend."

Hedge funds have already made fortunes by lending to those shunned by banks for being too risky, for example in the case of the takeover of Manchester United by the Glazer family, and hundreds of other leveraged loans. London is an attractive market for such investors. The city is often referred to as the divorce capital of the world, because stay-at-home spouses are in principle entitled to share a family fortune on a 50-50 basis. About £1bn is thought to have been awarded to Slavica Ecclestone in her divorce from her husband Bernie, the Formula One billionaire, one of the most generous settlements of all time. "English law just takes into account that a contribution to take care of the family is equal to the bread-winning contribution," says Deborah Jeff, head of family law at the London firm Seddons.

With banks still restricting their loan books, investors are opening their wallets to fund impoverished commercial and individual claimants. Juridica Investments and Burford Capital have recently sought listings on London's Alternative Investment Market, while Independent Litigation Funding has expanded this year, and IGS, a hedge fund advisory firm, has developed Libra Litigation Fund. "There was a lot of interest from the hedge fund community to invest in litigation funding," says John Godden, chief executive of IGS. "The returns are not related to stock or equity markets at a time when bonds, equities and commodities are increasingly moving in the same direction. Hedge funds like to invest in things that move in a different direction. They are more flexible. They are willing to take more risk. They are early adopters."

However, some in the industry are wary of funding divorce cases because of the emotions involved. Leslie Perrin, partner at Calunius Capital, a litigation funding firm, says: "We fund economically rational litigation by commercially responsible claimants. I fear that it is very unusual for divorce proceedings to fall into that classification – they tend to be economically irrational and commercially irresponsible."

Still, some commercial cases can be as complex as a divorce. "Business cases can be more emotional than divorce – and they can be [just] as irrational," Allianz's Stuerwald says. "Just the fact that someone is emotional doesn't stop us from funding."

There's plenty of work. After months of relative inactivity for divorce lawyers, business is picking up.

"At one point in the recession, people thought twice before considering divorce because of potential deflation of the value of the family wealth," says Simon Jacobs, partner at Seddons. "But that has passed, not completely, but now people have come to recognise this is a new economic era and they are going ahead with the divorce.

Only in america will you have action hero movie stars and ex-convic prostitutes becoming governors…


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Ex-Madam, Hedge Fund Exec on NYS Gov Ballot
Kristin Davis, 35, the former madam who claims Eliot Spitzer as one of her sex business' clients, made it onto the ballot in her quest to be the next governor of New York State.

Davis, who says she worked in the back office of several hedge funds before starting up her escort service, collected 22,000 ballots, comfortably putting her over the 15,000 required to get into the gubernatorial race.

Davis also has experience serving time. She did a four-month stint in Rikers Island jail after pleading guilty to promoting prostitution.

She is running as a candidate for her own independent party: the Anti-Prohibition Party.

Davis describes her party as libertarian. It supports de-criminalizing prostitution and marijuana, and supports casino gambling and marriage equality for gay couples.

Davis says she will draw on her hedge fund experiences to right New York's struggling economy.

"The two major parties have driven our state economy into a ditch," said Davis in a statement. "I think New Yorkers are ready for new ideas, new faces and new solutions."

Although Davis told HedgeFund.net she has no illusion that she can win in November, she may very well increase voter interest in something often ignored in state elections: candidate debates.

A Hedge Fund Manager's Teddy Bear is His Best Friend
Even though a hedge fund manager's teddy bear might be his best friend, especially when the markets are volatile, a convicted manager is going to have to part with his valuable collection of the fuzzy toys.

Ex-broker-dealer and hedge fund manager Paul Greenwood has put his Steiff teddy bear collection up for sale at Christie's in London, Bloomberg reported. The collection is valued at about ₤1.2 million($1.9 million).

Greenwood, who was a principal with broker-dealer WG Trading and hedge fund firm Westridge Capital Management, pleaded guilty in July to taking about $554 million from investors.

The teddy bear collection was one of the things prosecutors alleged Greenwood used client money to buy. Besides that, he and his partner, Stephen Walsh were alleged to have used their ill-gotten gains for million-dollar homes and a horse farm.

The two men also had a minority stake in the New York Islanders, a professional hockey team.

Greenwood is cooperating with the government in its case against Walsh in hopes of lowering what could be as much as an 85-year prison term.

An attorney for Greenwood could not be immediately reached.



VIA HFN DAILY

Just following up on the circus act


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Ex-Hedge Fund Exec/Madam Loses NY Gov Race
Although the after-election fete for Kristin Davis wasn't a victory party, the former hedge fund executive turned madam turned New York State gubernatorial candidate was far from downbeat.

Davis was hoping for at least 50,000 votes to win her Anti-Prohibition party an official line on the ballot.

"I would love to be Line C," she told HedgeFund.net, referring to the line following the Democrats and the Republicans.

Davis was philosophical about her loss to governor-elect Andrew Cuomo, saying she believed that her party's presence on the ballot raised awareness about her platform, which is broadly pro-casino gambling, pro-decriminalization of marijuana and prostitution and pro-gay marriage.

Davis, who worked for California-based Brookhaven Capital Management before turning to the business of managing call girls was caught up in the Elliot Spitzer scandal when it came out that she supplied escorts to the ex-Governor.

Davis may have gone down to an expected defeat, but the Republicans recaptured the U.S. House in an election tide that saw most of the country turning toward that party as a reaction to a Democratic White House and Congress and a stalled economic recovery.

The national legislature is now divided, as the Senate remained in Democratic hands.

Snapman wrote:

Just following up on the circus act


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Ex-Hedge Fund Exec/Madam Loses NY Gov Race
Although the after-election fete for Kristin Davis wasn't a victory party, the former hedge fund executive turned madam turned New York State gubernatorial candidate was far from downbeat.

Davis was hoping for at least 50,000 votes to win her Anti-Prohibition party an official line on the ballot.

"I would love to be Line C," she told HedgeFund.net, referring to the line following the Democrats and the Republicans.

Davis was philosophical about her loss to governor-elect Andrew Cuomo, saying she believed that her party's presence on the ballot raised awareness about her platform, which is broadly pro-casino gambling, pro-decriminalization of marijuana and prostitution and pro-gay marriage.

Davis, who worked for California-based Brookhaven Capital Management before turning to the business of managing call girls was caught up in the Elliot Spitzer scandal when it came out that she supplied escorts to the ex-Governor.

Davis may have gone down to an expected defeat, but the Republicans recaptured the U.S. House in an election tide that saw most of the country turning toward that party as a reaction to a Democratic White House and Congress and a stalled economic recovery.

The national legislature is now divided, as the Senate remained in Democratic hands.

Great find. Sometimes real life is better entertainment than cinema....This story is too good to be true.

Btw, I read that Soros had $1 Million invested towards the passage of prop 19... proposition denied!

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Spitzer Call Girl Now a Commodities Trader
A new documentary about ex-New York State governor Eliot Spitzer reportedly features one of his favorite call girls, who is now a commodities trader.

Alex Gibney's movie, "Client 9: The Rise and Fall of Eliot Spitzer," features a woman who is called "Angelina" and who is played by an actress, according to a Wall Street Journal article.

Spitzer, once a rising politico, had to resign his gubernatorial post in March 2008 when it came out that he frequented prostitutes.

Gibney theorizes that Angelina's powerful clientele taught her what she needed to know about trading.

The filmmaker also said that he was surprised to discover that Ashley Dupre, who is the prostitute most identified with the Spitzer case, was a bit player in the drama.