Singapore Hedge Fund

Alternative asset management in Singapore

A new (and some old) rogue traders

PVM Oil Futures Limited said on Friday Steve Perkins, a senior broker based at the firm’s London office, was responsible for unauthorized Brent crude futures trades which landed the firm with a loss of nearly $10 million.

The loss, however, was relatively small compared with other trading scandals in the past, often costing companies billions of dollars.

Following is a list of some of the major financial market trading scandals in a chronological order.

May 2009 – A former Morgan Stanley trader, who built up a hefty unauthorized oil futures position after a long liquid lunch and then hid the deals overnight, earned a ban from Britain’s financial watchdog.

The Financial Services Authority (FSA) said in May David Connor Redmond was a freight and oil trader with Morgan Stanley when he took a lunch break of more than three hours on February 6, 2008. The size of the loss was not disclosed.

January 2008 – French bank Societe Generale said unauthorized trade by a single dealer had caused it a 4.9 billion euro ($6.87 billion) loss. The loss caused by Jerome Kerviel, then a junior trader with the bank, resulted in the resignation of chairman Daniel Bouton.

Kerviel was freed from prison in March 2008.

November 2006 – Mitsui & Co, Japan’s second-biggest trading house, shut Mitsui Oil Asia (MOA) after the Singapore office racked up losses amounting to $81 million in naphtha trading up to November 17, 2006.

Noiyuki Yamazaki, who made false accounting entries, was sentenced in 2009 to five years in jail.

March/April 2006 – Hedge fund Amaranth Advisors LLC and its former head trader, Brian Hunter, made up to $6.4 billion in losses from natural gas contracts before it folded in 2006.

In July 2007 the Commodity Futures Trading Commission sued Amaranth and Brian Hunter, alleging that they tried to manipulate natural gas futures prices.

June 1996 – Japan’s trading house Sumitomo Corp suffered a $2.6 billion loss over 10 years from unauthorized copper trades, primarily by chief copper trader Yasuo Hamanaka.

Sumitomo fired Hamanaka, once dubbed “Mr Five Percent” because his trading team was believed to control five percent of the world’s copper trading. He was jailed for eight years.

September 1995 – Japan’s Daiwa Bank suffered a $1.1 billion loss from unauthorized bond trading by Toshihide Iguchi, one of its executives in the United States. He was imprisoned in 1996.

February 1995 – One of Britain’s oldest investment banks, Barings Plc, collapsed after lone futures trader in Singapore, Nick Leeson, lost some $1.4 billion in derivatives trading. Leeson was jailed in Singapore. Barings was sold to Dutch bank ING for one pound.

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Brummer & Partners launches Karakoram in Singapore

Singapore is reallybecoming the place to be for new Hedge Fund…

Brummer & Partners, Sweden’s largest hedge fund manager, has set up an office in Singapore and is launching a long-short fund focusing on Asian ex-Japan equities, sources familiar with the firm said.

The fund, called Karakoram, will be launched on Wednesday and has an initial capital of $80 million, most of which is seed money from the parent firm, the sources said. The fund hopes to notch an annual net return of 15-20 percent.

Brummer is one of the more high profile hedge fund launches seen in Singapore over the last few months. The company declined comment on the launch of the fund.

Karakoram is a large mountain range spanning the borders between India, Pakistan, and China.

Brummer is a privately-owned hedge fund manager with about $5.2 billion in assets under management spread over several funds. Its portfolio managers typically have fairly large stakes in the funds they manage.

Karakoram is charging an annual management fee of 1 percent plus 20 percent of returns that exceed a pre-agreed target, which is lower than the traditional 2 and 20 percent charged by most funds in the past, according to company documents seen by Reuters.

Brummer’s venture into Asian equity comes during a rally in Asia ex-Japan stocks .MIAPJ0000PUS which have risen 34 percent so far this year, outperforming the 1.8 percent gain in the S&P 500 .SPX and the 2.2 percent rise in European stocks .

The improvement in investor sentiment has slowed redemptions at global hedge funds, and many industry players expect Asian and other emerging market funds to see net inflows in the current quarter.

Brummer’s five-man Singapore team is led by Chief Investment Officer Chia Ee Toh, who was previously with Amaranth Advisors and Schroder Investment Management.

According to Lipper, a unit of Thomson Reuters, Brummer also operates a fund of hedge funds structure that invests in the firm’s various funds. The Swedish firm has been looking to bring in new investment teams to broaden the range of strategies it offers clients.

With Reuters

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