Administration May 22, 2008

Judge Again Rebuffs NYC Fund's Attempt to Sue Apple

May 22, 2008 (PLANSPONSOR.com) - The New York City Public Employees' Retirement System has lost a second attempt to sue Apple Inc.
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The Sun  newspaper said the city tried to refile a suit over stock options backdating at the company based on different claims under the Securities Exchange Act.   A U.S. District Court Judge in California last year ruled that the pension fund could not sue Apple for damages because it did not suffer any harm; the pension fund had profited from its shares of Apple stock, according to The Sun.

This time the judge decided NYCPERS could not come back with different charges. He said the pension fund “made a strategic decision” to only pursue some claims in the first suit and that allowing the city to add new claims would “run counter to well-established” precedent and impose a “financial burden to Defendents,” according to the news report.

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The sweeping stock options probe by the Securities and Exchange Commission (SEC) led to legal actions against executives and counsel at many companies. In December 2006, after completion of an internal probe, Apple cleared CEO Steve Jobs of any misconduct, saying he was unaware of the accounting implications of backdated grants and did not financially benefit from them because he never exercised his options (See Apple CEO Aware of Some Stock Option Grants ). Apple Inc.’s former chief financial officer Fred Anderson settled with the SEC over allegations he was involved in backdating stock options (See Report: Ex-Apple CFO Works Out Backdating Allegations ), and former General Counsel Nancy R. Heinen was charged in the scheme (See SEC Charges Heinen in Apple Backdating Scheme ).

The options backdating scandal also resulted in numerous shareholder lawsuits (See United Health Options Backdating Suit Gets Class Action Status ).

Administration May 21, 2008

Hedge Fund Assets Fall in Q108

May 21, 2008 (PLANSPONSOR.com) - Hedge fund assets fell an estimated 1.4% in the first quarter of 2008 to $2.848 trillion, according to a report released by HedgeFund.net.
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A press release said the Hedge Fund Asset Flows & Performance Report was released concurrent with the HFN Q1 2008 Administrator Survey which shows total administered hedge fund assets were $2.759 trillion in Q108. New allocations to hedge funds were an estimated $53.02 billion during the quarter, while performance losses decreased assets by an estimated $93.18 billion resulting in the first on record quarterly loss to total hedge fund assets, according to the release.

Total assets in funds of funds increased 1.1% to an estimated $1.404 trillion. Performance losses of $57.19 billion were offset by new allocations of an estimated $71.85 billion.

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Fixed income funds increased by 4.8% before performance losses, but the first quarter losses resulted in total estimated assets increasing only 3.6% to $554.79 billion. Equity focused fund assets fell 0.6% due to redemptions and with performance losses, total assets in equity focused funds fell 5.4% in the quarter to an estimated $1.038 trillion.

Emerging market hedge funds experienced their largest drop on record in Q108. Total asset levels fell 5.5% due entirely to performance losses estimated at $27.80 billion, HedgeFund.net said.

Despite equal-weighted average returns from distressed funds being negative in the first quarter, good performance from larger funds helped total asset levels in the strategy to rise. Performance gains along with new allocations of $6.04 billion resulted in total assets in distressed funds rising 3.3% to an estimated $252.32 billion.

Energy sector fund assets experienced their largest drop on record in Q108, falling 12.8% to an estimated $122.20 billion due mostly to performance losses of $12.91 billion. Net redemptions and liquidations resulted in an additional $5.05 billion exiting energy sector funds – likely the result of large monthly loses in the sector in November 2007 and January 2008, according to the release. The average energy sector fund was down 5.4% in the first quarter.

The full report provides asset flow and performance data for over 70 different regions, asset classes, sectors, and strategies in which hedge funds invest and can be ordered online at www.HedgeFund.net .

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