Hedgemedia's AltInvestment Global News Round-Up: US legislators target carried interest to relieve AMT burden on taxpayers
Charles Rangel, chairman of the Ways and Means Committee of the US House of Representatives, said this week he was considering raising taxes on carried interest paid by private equity and hedge funds to help pay for temporary relief from the country's alternative minimum tax.
The New York Democrat is looking for ways to finance a USD47bn temporary fix for a year for the AMT, but eventually wants to repeal the tax. The alternative minimum tax was originally created in 1969 to ensure that the richest members of society cannot shelter their income from tax but in recent years it has been increasingly hitting the pockets of middle-class Americans.
Goldman Sachs alumnus Daniel Och, who established Och-Ziff Capital Management in 1994, stands to make USD2.5bn from the New York firm's planned flotation and from the sale of a nearly 10 per cent stake to Dubai International Capital, part of the emirate's government investment arm. Following the transactions, Och, who established the firm with USD100m in capital from the Ziff family, will still own just less than 50 per cent of the company. Och-Ziff manages USD30bn for some 700 mostly institutional investors.
Investors want Bear Stearns investigation
Investors in the offshore and onshore vehicles of collapsed Bear Stearns hedge fund want forensic accounting firm FTI Capital Advisers to replace the New York investment bank as the fund's controlling party. They want FTI Capital, a broker-dealer unit of FTI Consulting in Baltimore, to investigate how the Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage Fund became insolvent in this summer's credit market downturn.
The fund invested heavily in collateralised debt obligations linked to risky mortgages. Investors represented by law firm Reed Smith have set a November 7 vote in New York to replace Bear Stearns as the general partner.
California is upping the ante by suggesting it wants those hedge fund managers that aren't registered with the Securities and Exchange Commission and that have fewer than 15 investors and less than USD25m in assets to register with the state. Hedge fund with more than 15 investors and USD25m are already required to register. Other popular hedge fund locales, such as New York and Connecticut, do not impose such registration requirements.
Mark Lay, chief executive and founder of Pittsburgh-based MDL Capital Management, was convicted of investment advisory and mail fraud connected to the loss of USD216m in a high-risk hedge fund and will be sentenced early next year. Ohio Bureau of Workers Compensation was the sole investor in the hedge fund Lay set up in Bermuda. He was accused of failing to inform the investor of the risks he was taking. Lay's attorney will seek to overturn the verdict.
Permal takes the Silk Road
Fund-of-funds operator Permal Group is preparing its Permal Silk Road Fund for a late November launch. The fund will invest in up to 40 underlying managers focused on regions along the ancient commercial highway, spanning Asia, North Africa and the Middle East, as well as some global strategies. The fund plans to invest in event-driven, equity long/short, global macro, fixed-income and long-only managers.
AIG Investments, the asset management arm of American International Group, has completed marketing for its AIG Highstar Capital III private equity fund. AIG and Highstar raised USD3.5bn for the fund, which invests in the infrastructure sector, from pension funds, endowments, financial institutions and family offices.
Highstar III raised roughly twice its initial investor capital target and four times the amount committed to Highstar II, which closed in 2005. The latest fund's current portfolio includes Ports America, which it bought from Dubai Ports World in March 2007, and two other US-based port operators.
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