LBO leaks widespread
Insider trading in the run-up to LBO announcements appears to be rampant. In the 10 biggest buyouts announced since Jan. 1, 2006, call-option trading surged more than 180% in the three days ahead of the deal being disclosed, compared with the 20-day average prior to the announcement, according to an analysis by P&Is sister publication FinancialWeek.
Conversely, call-option trading ahead of corporate mergers and acquisitions actually declined in the days ahead of the announcement.
There are far more players involved in LBO financings than in typical M&A activity, accounting for greater chances of news leaking. The emergence of club deals involving several private equity firms also increases the number of players in some buyouts.
Most recently, trading in Dow Jones options spiked 502.6% in the days before News Corp. launched its $5 billion bid for the company.
NY launches ethics program
New York State Comptroller Thomas DiNapoli has announced a series of steps to prevent abuse of New Yorks $145 billion pension fund, said Dennis Tompkins, spokesman.
Mr. DiNapolis plan includes: appointing an inspector general to monitor the activities of the comptroller and staffers; launching a hot line for anonymous tips; appointing an ethics counsel to provide legal opinions and set up an ethics training program; and setting up internal controls, including regarding travel and correspondence.
Mr. DiNapolis predecessor, Alan Hevesi, resigned last December and pleaded guilty of one felony charge after admitting using state employees to chauffeur his wife. Albany County District Attorney David Soares is looking into the possibility of alleged improprieties that might have involved a staffer in Mr. Hevesis administration.
Separately, New York State Attorney General Andrew Cuomo told reporters last week that his office was investigating systemic conflicts of interest, pre-dating Mr. DiNapolis tenure.
La. Schools moves to 130/30
Louisiana School Employees Retirement System plans to put between 3% and 5% of total assets into a 130/30 strategy, confirmed Brendan Brosnan, CIO of the $1.6 billion fund. Funding will come from reductions to fixed income and equity, but no managers will be terminated. Consultant Segal Advisors will conduct an invitation-only search for one or two managers; a selection is expected by early fall.
U.K. county adds bond firms
Dorset County Pension Fund selected European Credit Management and Royal London Asset Management to run £140 million ($277.5 million) each in fixed income, confirmed Kate Boyle, a spokeswoman with bfinance, which reviewed the £1.4 billion funds fixed-income portfolio and assisted in the hiring. Ms. Boyle declined to identify the manager being replaced.
PIMCO, Mellon to run GTAA
Worcester (Mass.) Retirement System hired PIMCO and Mellon Capital to run global tactical asset allocation portfolios of $15 million each, confirmed James DelSignore, chairman. Officials of the $710 million fund added a GTAA allocation of 3% to 5% of total assets earlier this year to increase diversification. Meketa Investment Group assisted.
CME ups ante for CBOT
Chicago Mercantile Exchange sweetened its offer for the Chicago Board of Trade to counter a rival bid by the energy-market IntercontinentalExchange. The CME is now offering 0.35 shares of its own stock for each CBOT share, up 16% from when the merger agreement was announced in October 2006. At current stock price, this values the CME offer at $9.8 billion. The offer includes a cash tender for a percentage of the shares of the new company and more seats for CBOT members on its board.
The CBOT board is recommending that its shareholders support the merger, according to a CBOT statement. In its own statement, the ICE said it is evaluating its options.
Carlyle slates public fund
The Carlyle Group plans to launch a public leveraged finance fund by the end of June to raise about $1 billion on the Euronext Amsterdam, according to sources close to the transaction.
The fund would be mainly mortgage-backed securities. Christopher Ullman, director of global communications, declined to comment.
Hsu moves to therapy
Albert Hsu was released from jail May 9 into a psychiatric therapy program to treat bipolar disorder. The Connecticut Superior Court in Stamford ruled that the former money manager must spend at least 30 days in a therapy program and must live with his parents in New York after his release, according to a report in the Stamford Advocate.
Mr. Hsu He was arrested March 2 at his home in New Canaan, Conn., accused of using the Internet to solicit someone to rape and kidnap his former mistress. Under terms of his release, he is prohibited from contacting the alleged victim and from entering New Canaan.
Mr. Hsus next court appearance is June 18.
Until his arrest, Mr. Hsu was CIO, managing director and co-founder of Anchor Point Capital Management.
Ex-Ohio BWC official sentenced
Terrence Gasper, former CFO of the $17 billion Ohio Bureau of Workers Compensation fund was sentenced on May 9 to 64 months in prison and fined $60,405.
Mr. Gasper had pleaded guilty last year to accepting bribes from an independent marketer seeking to do business with the fund and also for using a Florida condominium provided by two brokers to whom Mr. Gasper had steered business with the fund.
In court, Mr. Gasper said that superiors compelled him to retain some investment managers who were politically connected to the fund.
Until we bring those superiors and the people who were pulling their strings to justice, we wont be able to close the book on this scandal once and for all, Ohio Attorney General Marc Dann said in a statement.
Founding partner to leave SIS
Margaret Jedallah resigned as vice president and head of manager research at Strategic Investment Solutions, confirmed Michael Beasley, managing director.
Ms. Jedallah, who was a founding partner of the consulting firm, resigned for lifestyle reasons and will leave at the end of the month, said Mr. Beasley. A successor is being sought. Paul Harte, vice president and senior consultant, will handle her duties in the interim.
Ms. Jedallah accepted a position at wealth advisory firm Harris myCFO; no details about her new position were available.
Fortune 100 DB plans decline
Fifty-eight companies in the Fortune 100 provided defined benefit plans in 2006, down from 63 in 2005, according to a study by Watson Wyatt Worldwide. Of the 58 pension plans, 31 were defined benefit plans and 27 were hybrids, including cash balance plans.
In 1985, 90 of the Fortune 100 companies provided a defined benefit plan.