SEC Files Lawsuit Over Alleged Insider Trading in Global Industries

US regulators have filed a lawsuit alleging insider trading related to the recent purchase of US underwater oil services company Global Industries Ltd by France's Technip SA.

(September 20, 2011) — The Securities and Exchange Commission (SEC) has filed a lawsuit alleging insider trading relating to the recent purchase of US underwater oil services company Global Industries Ltd by France’s Technip SA, Reuters has reported.

The complaint, obtained by Reuters, alleged that the unnamed defendants purchased Global Industries shares on the days immediately before Technip said it would purchase the company. This “suggests that the information was obtained as a result of breaches of fiduciary duty,” the SEC asserted, seeking to force the defendants to surrender their allegedly illegal profit and pay civil fines.

Additionally, according to the Wall Street Journal, the securities regulator has issued subpoenas to hedge funds and a range of other trading firms, demanding additional background about specific trades prior to Standard & Poor’s decision to lower the country’s rating to AA-plus from AAA on August 5. SEC officials are investigating firms that bet the stock market would sharply fall, the WSJ reported.

The heightened scrutiny over potential insider trader scandals follows investigations conducted late last year, when three hedge funds were raided as part of a probe by the Federal Bureau of Investigation, the Manhattan US Attorney’s office, and the SEC. One scheme impacted was the Missouri State Employees Retirement System, or MOSERS, which had $104 million — 1.4% of its $7.4 billion portfolio — invested with Diamondback Capital Management LLC, one of the fund’s under investigation. MOSERS additionally had an indirect investment of $1.5 million in Level Global Investors LP, another firm that was under investigation managed by Blackstone Alternative Asset Management, MOSERS’ hedge fund consultant.

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To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

(September 20, 2011) — Ex-Soros trader Scott Bessent has returned to the $25 billion firm as its chief investment officer.

He succeeds Keith Anderson, who left the firm in July, as his performance during the previous 18 months lagged behind his peers, Bloomberg reported.

“I am pleased to announce that Scott Bessent will join Soros Fund Management LLC,” Soros wrote today in a letter originally obtained by Bloomberg, describing the transition to a family office. According to the letter, Jonathan Soros will leave the money-management arm to be chairman of the foundation. “Scott has been a well known investor in the macro space for two decades,” according to the letter sent to investors by Soros’s sons, Robert Soros and Jonathan Soros, who have been top executives of the firm.

As CIO, Bessent will be responsible for asset allocation, managing internal teams, and choosing and monitoring external money managers. He will also be in charge of risk management, putting on hedging, and making tactual investments.

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Bessent obtained his bachelor’s degree in 1984 from Yale University. Even though he originally wanted to be a journalist, he started his career in finance working at Brown Brothers Harriman & Co., and later for the Olayan Group. He subsequently worked for Jim Chanos’s Kynikos Associates Ltd., a short-only fund based in New York. From 1991 to 2000, he worked at Soros Fund Management, running Soros’ European fund by the age of 29. Most recently, Bessent worked at Protege Partners, an investment firm that seeds upstart hedge funds.

Soros’ move to name a new CIO comes about a month after the fund decided to return money to outside investors, converting itself into a family office. In July, after more than 40 years running hedge funds, Soros said that Washington’s increased oversight of the once unregulated industry was a primary reason behind his decision to cease running external cash. Soros joined an expanding list of fund managers who have recently reconfigured their businesses as new regulations have become more stringent. Earlier this year, for example, Carl Icahn also returned money to outside investors.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742