Compliance November 8, 2007

Former UBS Broker Faces Fraud Suit over Hedge Fund

A U.S. hedge fund run by a former UBS AG broker is facing fraud claims in an arbitration complaint filed by investors.
Reported by

Reuters reports that a hedge fund run by Sample & Cross Capital Management lost 75% of its value in a single day of trading.

Sample & Cross Capital Management was formed by former UBS employees Matthew Sample and J. David Cross, who ran the fund, and suffered heavy losses in August. Sample and Cross told investors in an August 17 letter: “It is with great sadness that we are announcing the closing of the Vega Opportunity Fund…The recent unprecedented market gyrations in the past month required that we take protective action to stem further losses in our strategy.’

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Investor losses from soured option trades by the Vega Opportunity Fund could approach $100 million, according to securities lawyer Andrew Stoltmann, who is representing some investors, the news report said.

The complaint filed late last month with the American Arbitration Association accuses Sample and Cross of violating the antifraud provisions of Illinois securities law, saying Sample and Cross marketed the hedge fund’s strategy as seeking capital preservation, according to Reuters.

The Markets November 8, 2007

Target Date Fund Benchmarking Site Launched

Target Date Analytics (TDA) has launched a new Web site that benchmarks target date lifecycle funds.
Reported by

According to an announcement by TDA, contents of the new site include:

Articles and white papers that describe TDA’s methodologies and backtests of TDA’s results,

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Free index returns on the three TDA Pure Target Date Series as well as a Peer index,

Free categorizations of target-date mutual funds as Conservative, Moderate, or Aggressive, and

Free MPT measures of target-date mutual fund performance, namely alpha, beta, and R-squared relative to the appropriate TDA pure index.

More information is at www.tdbench.com.

TDA is an effort by Craig L. Israelsen, Ph.D., an Associate Professor in the School of Family Life at Brigham Young University; Joseph C. Nagengast, president of Turnstone Advisory Group LLC; and Ronald J. Surz president of PPCA, Inc. and principal of RCG LLP (See New Firm to Evaluate Target-Date Funds).

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