“Chinese investors and regulators are beginning to understand that actually a hedge fund is about hedging,” Yifei Li (left) chairperson of hedge fund Man Group Plc’s China unit, explained recently. Unfortunately, there seems to have been a breakdown on the ‘understanding’ dimension, as yesterday she was taken into custody by Chinese authorities, who allegedly suspect her of something profoundly illegal.
When I read soundbites like the one above from Ms Yifei, the scales fall from my eyes about how brave females smash their expensively coiffured heads through the Looking Glass ceiling. Because while most of you probably thought up until now that Hedge Funds might be about, say, funding, you’d be wrong. They are in reality all about hedging. And shorting, directionalising, carpet-bagging and then insurance-demanding.
Man Group is a corporate name associated in many minds with Bernie Madoff, who ran a scam for donkey’s years and then made off with all the money. In 2008, Man invested a third of a billion dollars in two funds exposed to Madoff Securities, and was thus a bit unhedged when it all went belly-up.
At the time, Man had signed up to the Hedge Funds Standards Board to encourage best practice, an outfit that must have spent hours debating the meaning of the word ‘best’ in the context of hedge funds. Given that Man had held the raped Madoff funds for some ten years, it rapidly became the epicentre of impertinent questions about duty of care to its investors.
But let us not knock Man Group, for it has an illustrious history. In 2006, Man Group PLC’s U.S. brokerage and seven of its employees were sued for fraud and racketeering by a court-appointed receiver seeking to take back investor assets lost in the collapse of a $230 million Philadelphia hedge fund. And as recently as May 2015, 42% of investors rejected the company’s remuneration policy, while 34% voted against its remuneration report and a further 2% abstained.
Ah yes, all the tell-tale signs are there: insider knowledge, fraud, massive salaries. I have to say, I am increasingly seeing the Chinese crackdown on shadowy banker folks enriching the already insanely rich as not so much repression as rounding up the usual list of suspects who perhaps should’ve been rounded up long ago.
Yifei Li, I am reliably informed, will face charges of ‘illegally directionalising’ already volatile Chinese markets in order to achieve client gain to the detriment of China. As long ago as 2001, Yifei Li was selected as one of 25 Rising Star Leaders for the Next Generation by Fortune and was on the cover of Fortune Magazine. From 2001, for four consecutive years she was selected as one of the 50 Most Powerful Women by Fortune magazine. She was also selected as one of Ten Women to Watch in Asia by Wall Street Journal in both 2005 and 2006.
And now she has been selected by the Chinese State Police. This lady is a big fish: one hopes that Beijing knows what it’s doing.