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Hedge fund 3 Degrees Asset Management may have to shut its doors, as the Monetary Authority of Singapore (MAS) is alleging that its founder, Moe Ibrahim, diverted assets, Bloomberg BusinessWeek reports.This is major fall from grace for Ibrahim, who was named one of the 20 Rising Stars of Hedge Funds by Institutional Investor magazine in 2007. His hearing is set for October 20th, and will be closed.
The MAS started investigating 3 Degrees in 2008 when it was involved with a $40 million debt scandal. The defendant in that case, a man named Agus Anwar, claimed that Ibrahim had diverted $6.7 million from his fund to 3 Degrees. 3 Degrees says that even if that did happen, there was nothing illegal about it.
So now, the MAS wants to withdraw 3 Degrees’ exempt fund manager status which liberates it (and other funds with less than 30 qualified investors) from certain business conduct requirements under Singapore’s Securities and Futures Act.
According to court papers, that would “leave the fund with no bargaining power to liquidate assets and would ‘create a bad precedent for the future.'”
And they had more to say about the MAS (via Bloomberg BusinessWeek):
3 Degrees called the (MAS) decision “draconian” and… based on “illogical, irrational and unreasonable” statements and assumptions, according to its lawsuit.
“Other hedge fund managers would face the same risk and may become over-cautious for fear of having their own exemptions withdrawn,” Ibrahim said in the filings.
“The authority would appear to be sending out a signal that all it takes are strong allegations from a desperate, debt- ridden party without conclusive evidence to corroborate these allegations or a disgruntled employee for a withdrawal of an exemption or licence to occur,” he said.
The MAS was unwilling to comment on the suit.