Ex-Highbridge Asia chief's hedge fund delayed by SFC review

HONG KONG Mon Sep 5, 2011 6:23am EDT

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HONG KONG (Reuters) - The launch of a $300 million (186 million pounds) hedge fund by Carl Huttenlocher, the former Asia head of JPMorgan Chase & Co's (JPM.N) Highbridge Capital, has been delayed due to a review by Hong Kong's regulator after an anonymous complaint, Huttenlocher said.

The September 1 soft-launch of the fund, one of the most eagerly anticipated events of the year in the Asian hedge fund world, was put off after an anonymous complaint to the Hong Kong's Securities and Futures Commission SFC.L about irregularities in Huttenlocher's previous role, delaying the grant of a licence for the launch.

But in an interview to Reuters on Monday, Huttenlocher said he was confident of clearing the allegations and that plans to open his hedge fund to external investors on December 1 remained on track.

"It's a distraction," Huttenlocher said of the complaint. "I am very confident that these (allegations) are baseless," the star fund manager said from his brand new office opposite Hong Kong's Four Seasons hotel.

The complaint had alleged that investors who chose to redeem in 2008 from the Highbridge Asia Opportunities Fund that Huttenlocher managed were disadvantaged as his fund improperly valued illiquid assets and gated redemption during the height of the financial crisis and later.

That unfairly benefited ongoing investors and his previous firm, the complaint said.

REPLY TO SFC

Huttenlocher said his team was informed by the SFC about the complaint on Friday and he would reply to the market regulator by the end of the week. He hopes to win the licence to start the hedge fund as soon as possible.

The hedge fund, Myriad Asset Management, was expected to start trading with just over $300 million initially in September, two sources had told Reuters in July.

It aimed to raise more than $1 billion early next year after opening to external investors, the sources had said.

Huttenlocher, who quit Highbridge Capital in March, managed Highbridge's Asia-focused fund, which once had about $2 billion in assets under management.

Faced with his departure, Highbridge, which oversees about $29 billion in assets through its funds globally, decided to wind down the Asian fund. The fund focused on equity long/short and convertible bond strategies.

Many clients who earlier invested in Huttenlocher's fund will return to Myriad, sources had said in July.

The firm has hired Scott Gaynor from Morgan Stanley (MS.N) as its chief operating officer.

(Editing by Jacqueline Wong and Muralikumar Anantharaman)

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