Wednesday, July 27, 2011
Billionaire investor Soros closes hedge fund
Billionaire investor George Soros is closing his nearly $26 billion hedge fund to outside investors so that it will be managed solely for the Soros family, according to a letter obtained by The Associated Press on Tuesday. (Watch: George Soros speaks to NDTV)
The letter, sent to investors in the Quantum Endowment Fund, says Soros Fund Management LLC is making the change because of new rules that will expand hedge fund disclosure requirements.
About $750 million of the total $25.5 billion in the fund is invested for outsiders, rather than the family, according to a person familiar with the matter. The person declined to be identified because he was not authorized to disclose details about the private company.
The $750 million is expected to be returned to outside investors by year's end.
Chief Investment Officer Keith Anderson is leaving as the fund closes to outsiders, according to the letter from Soros' sons, Jonathan and Robert, who are deputy chairmen of the New York-based, family run company. Anderson joined Soros Fund Management in early 2008.
The developments were reported earlier by Bloomberg News.
The fund has delivered average annual returns of about 20 percent a year since its inception in 1969. Soros, now 80, amassed a fortune betting on global currency markets, including his successful speculation in 1992 that the British government would devalue the pound.
The fund closed to investments from new outside clients in 2000, and the cash that will be returned is from longtime clients who invested before that change.
The fund's latest move comes as hedge funds face closer scrutiny from regulators. Hedge funds are lightly regulated investment pools. Investors in them are primarily wealthy individuals and institutional clients such as pension funds and endowments.
The financial overhaul law that Congress passed last year requires hedge funds to open their books to periodic inspections by the Securities and Exchange Commission. The funds also will be forced to disclose information about their operations, finances and investors.
To continue managing money for outside investors, Soros' fund would be required to register with the SEC by March, said the letter.
"An unfortunate consequence of these new circumstances is that we will no longer be able to manage assets for anyone other than a family client as defined under the regulations," said the letter, dated Tuesday.
Until now, the letter said, the company has managed outsiders' investments "on other exemptions from registration which allowed outside shareholders whose interests aligned with those of the family investors to remain invested in Quantum."
In the future Soros Fund Management's investment advisory services "will only be available to Soros family accounts and related entities," the letter said.
George Soros is a philanthropist who has donated more than $8 billion during his lifetime. He has become a lightning rod for conservative critics because some of his donations involved causes such as climate change and legalized recreational use of marijuana.
Born in Hungary, Soros emigrated to Britain as a youth after surviving the Nazi occupation of his country and later moved to the United States.