LEON BLACK founded Apollo Advisors, L.P. and Lion Advisors, L.P. to manage investment capital on behalf of a group of institutional investors, focusing on corporate restructuring, leveraged buyouts, and taking minority positions in growth-oriented companies. Since that time, Apollo and its affiliates have managed approximately $15 billion in such activities. Mr. Black also co-founded Apollo Real Estate Advisors, L.P., which since 1993 has invested in more than $5 billion of real estate-related assets. MORE
	BRUCE WASSERSTEIN is Chairman and CEO of Lazard and is also Chairman of Wasserstein & Co. and The Deal LLC. Prior to joining Lazard, Mr. Wasserstein was Executive Chairman at Dresdner Kleinwort Wasserstein from January 2001 to November 2001. Prior to joining Dresdner Kleinwort Wasserstein, he served as CEO of Wasserstein Perella Group (an investment banking firm he co-founded) from February 1988 to January 2001, when Wasserstein Perella Group was sold to Dresdner Bank. MORE
	DAVID M. RUBENSTEIN is a Co-Founder and Managing Director of The Carlyle Group, one of the world’s largest private equity firms. Mr. Rubenstein co-founded the firm in 1987. Since then, Carlyle has grown into a firm managing more than $70 billion from 30 offices around the world. Mr. Rubenstein, a native of Baltimore, is a 1970 magna cum laude graduate of Duke, where he was elected Phi Beta Kappa. Following Duke, Mr. Rubenstein graduated in 1973 from The University of Chicago Law School, where he was an editor of the Law Review. MORE
	MARTIN LIPTON, a founding partner of Wachtell, Lipton, Rosen & Katz, specializes in advising major corporations on mergers and acquisitions and matters affecting corporate policy and strategy and has written and lectured extensively on these subjects. Mr. Lipton is Chairman of The Board of Trustees of New York University, a Trustee of the New York University School of Law (Chairman 1988-98), a member of the Council of the American Law Institute, Co-Chair of the Partnership for New York City (2004-2006), and a Director of the Institute of Judicial Administration. MORE
	WILBUR ROSS, JR. is Chairman and CEO of WL Ross & Co. Mr. Ross may be the best known turnaround financier in the U.S., having been involved in the restructuring of over $200 billion of defaulted companies’ assets around the world. In 1998, Fortune Magazine called him “the King of Bankruptcy.” Mr. Ross organized International Steel Group in April 2002 and was its Board Chairman. By acquiring Bethlehem, LTV, Weirton, Acme, Georgetown and U.S. Steel’s plate operation, ISG became the largest integrated steel company in North America. MORE

LEON BLACK
Founding Partner
Apollo Management, L.P.

In 1990, Leon Black founded Apollo Advisors, L.P. and Lion Advisors, L.P., to manage investment capital on behalf of a group of institutional investors, focusing on corporate restructuring, leveraged buyouts, and taking minority positions in growth-oriented companies. Since that time, Apollo and its affiliates have managed approximately $15 billion in such activities. Mr. Black also co-founded Apollo Real Estate Advisors, L.P., which since 1993 has invested in more than $5 billion of real estate-related assets.

From 1977 to 1990 Mr. Black worked at Drexel Burnham Lambert Incorporated, where he served as Managing Director, head of the Mergers & Acquisitions Group and co-head of the Corporate Finance Department.

Mr. Black is a director of United Rentals, Inc.,and Sirius Satellite Radio Inc.

Mr. Black is a trustee of Dartmouth College, The Museum of Modern Art, Mt. Sinai Hospital, The Metropolitan Museum of Art, Prep for Prep, and The Asia Society. He is also a member of The Council on Foreign Relations, The Partnership for New York City and the National Advisory Board of JPMorganChase. He is also a member of the Board of Faster Cures and the Port Authority Task Force

Mr. Black graduated summa cum laude from Dartmouth College in 1973 with a major in Philosophy and History and received an MBA from Harvard Business School in 1975.
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BRUCE WASSERSTEIN
Chairman & CEO
Lazard

Mr. Wasserstein is Chairman and Chief Executive Officer of Lazard and is also Chairman of Wasserstein & Co. and The Deal LLC. Prior to joining Lazard, Mr. Wasserstein was Executive Chairman at Dresdner Kleinwort Wasserstein from January 2001 to November 2001. Prior to joining Dresdner Kleinwort Wasserstein, he served as CEO of Wasserstein Perella Group (an investment banking firm he co-founded) from February 1988 to January 2001, when Wasserstein Perella Group was sold to Dresdner Bank. Prior to founding Wasserstein Perella Group, Mr. Wasserstein was the Co-Head of Investment Banking at The First Boston Corporation. Prior to joining First Boston, Mr. Wasserstein was an attorney at Cravath, Swaine & Moore.
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DAVID RUBENSTEIN
Co-Founder & Managing Director
The Carlyle Group

David M. Rubenstein is a Co-Founder and Managing Director of The Carlyle Group, one of the world’s largest private equity firms. Mr. Rubenstein co-founded the firm in 1987. Since then, Carlyle has grown into a firm managing more than $70 billion from 30 offices around the world.

Mr. Rubenstein, a native of Baltimore, is a 1970 magna cum laude graduate of Duke, where he was elected Phi Beta Kappa. Following Duke, Mr. Rubenstein graduated in 1973 from The University of Chicago Law School, where he was an editor of the Law Review.

From 1973-75, Mr. Rubenstein practiced law in New York with Paul, Weiss, Rifkind, Wharton & Garrison. From 1975-76 he served as Chief Counsel to the U.S. Senate Judiciary Committee’s Subcommittee on Constitutional Amendments. From 1977-1981, during the Carter Administration, Mr. Rubenstein was Deputy Assistant to the President for Domestic Policy. After his White House service and before co-founding Carlyle, Mr. Rubenstein practiced law in Washington with Shaw, Pittman, Potts & Trowbridge (now Pillsbury, Winthrop, Shaw Pittman).

Mr. Rubenstein is on the Board of Directors or Trustees of Duke University, Johns Hopkins University, the University of Chicago, the Lincoln Center for the Performing Arts (Vice Chairman), the Kennedy Center for the Performing Arts, the Memorial Sloan-Kettering Cancer Center, Johns Hopkins Medicine, the Council on Foreign Relations, the Institute for Advanced Study, the Cold Spring Harbor Laboratory, the National Museum of American History of the Smithsonian Institution, the Museum of Natural History of the Smithsonian Institution, the Center for Strategic and International Studies, the Peterson Institute for International Economics, the Asia Society, the American Academy in Berlin, American Council on Germany, Freedom House and Ford’s Theatre.

Mr. Rubenstein is also a member of the Visiting Committee of the Kennedy School of Government at Harvard, the Dean’s Council at the Woodrow Wilson School at Princeton, the Advisory Board of the Stanford Institute for Economic Policy Research, the Board of Overseers of the Hoover Institution, the Trustees’ Council of the National Gallery of Art, the Madison Council of the Library of Congress, the International Business Council of the World Economic Forum, the Council of the National Trust for Historic Preservation, the Trilateral Commission, and the National Advisory Committee of J.P. Morgan Chase.

Mr. Rubenstein is married to Alice Rogoff Rubenstein, and they have three children.
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MARTIN LIPTON
Partner
Wachtell, Lipton, Rosen & Katz

Martin Lipton, a founding partner of Wachtell, Lipton, Rosen & Katz, specializes in advising major corporations on mergers and acquisitions and matters affecting corporate policy and strategy and has written and lectured extensively on these subjects. Mr. Lipton is Chairman of The Board of Trustees of New York University, a Trustee of the New York University School of Law (Chairman 1988-98), a member of the Council of the American Law Institute, Co-Chair of the Partnership for New York City (2004-2006), and a Director of the Institute of Judicial Administration. Mr. Lipton served as Special Counsel to the City of New York in connection with the fiscal crisis (1975-1978); Special Counsel, United States Department of Energy (1979-1980); and Acting General Counsel, United States Synthetic Fuels Corporation (1980). Mr. Lipton served as counsel to the New York Stock Exchange Committee on Market Structure, Governance and Ownership (1999-2000), as counsel to, and member of, its Committee on Corporate Accountability and Listing Standards [Corporate Governance] (2002) and as Chairman of its Legal Advisory Committee (2002-2004). Mr. Lipton has a B.S. in Economics from the Wharton School of the University of Pennsylvania and an L.L.B. from the New York University School of Law. He is a member of The American Academy of Arts & Sciences.
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WILBUR ROSS, JR.
Chairman & CEO
WL Ross & Co.

Wilbur Ross may be the best known turnaround financier in the U.S., having been involved in the restructuring of over $200 billion of defaulted companies’ assets around the world. In 1998, Fortune Magazine called him “the King of Bankruptcy.” Mr. Ross organized International Steel Group in April 2002 and was its Board Chairman. By acquiring Bethlehem, LTV, Weirton, Acme, Georgetown and U.S. Steel’s plate operation, ISG became the largest integrated steel company in North America. It was listed on the New York Stock Exchange until April when it merged with Mittal Steel to form the largest steel company in the world. Mr. Ross remains a director of Mittal and was a member of the three-director committee responsible for the recent successful bid for Arcelor.

In October 2005, the firm teamed up with India’s Housing Development Finance Corporation Limited, India’s $9.5 billion mortgage finance institution, to invest in Indian corporate restructurings and turnarounds. The firm has just become the first foreign fund selected by the Asset Reconstruction Company of India (“ARCIL”) to rehabilitate a major Indian company, OCM. In March, 2004, the firm organized International Textile Group (ITG) by buying and consolidating two bankrupt companies, Burlington Industries and Cone Mills. Mr. Ross serves as Chairman of ITG and is also Chairman of the Board of the Nano-Tex affiliate of ITG. Since then, ITG has announced investments in China, Viet Nam and Guatemala and acquired Safety Components International.

On October 1, 2004, WL Ross organized International Coal Group to acquire out of bankruptcy Horizon Natural Resources and two other coal companies and went public. It is listed on the New York Stock Exchange under the symbol ICO. In 2005, WL Ross formed International Automotive Components to acquire Collins & Aikman’s European operations and Lear’s European interior plastics division. In 2005, WL Ross acquired a major stake in Oxford Automotive which subsequently completed the friendly reverse takeover of Wagon, a London Stock Exchange listed company, to form a € 1 billion company. More recently, the firm acquired control of PLASCAR, the leading Brazilian automotive plastics company, Mitsuboshi in Japan and BST in Germany. In 2006, the Ross Funds made major commitments to Montpelier Reinsurance Holdings, and Mr. Ross joined the Board. Last month Lloyd’s approved for the first time a venture between one of its leading syndicates and the Ross Fund’s Panther Reinsurance affiliate.

In Japan, the firm also controls a number of businesses and manages real estate, corporate governance and private equity partnerships.

In 1999, President Kim Dae Jung awarded Mr. Ross a medal for his help during Korea’s 1998 financial crisis. He is a former Chairman of the Smithsonian National Board. Earlier, President Clinton had appointed him to the Board of the U.S.-Russia Investment Fund, and he served as privatization advisor to Mayor Rudolph Giuliani. Mr. Ross serves on the Executive Committee of the New York City Partnership and of the Japan Society and is a member of the Chairman’s Circle of the U.S.-India Business Council. He is a member of the Business Roundtable and is a Board member of the Yale University School of Management, which has presented him with its Legend of Leadership Award. He is also a member of the Committee on Capital Markets Regulation. Mr. Ross holds an A.B. from Yale University and an M.B.A., with Distinction, from Harvard University. A few of the awards received recently by WL Ross & Co. LLC are:

Buyouts 2002 Public to Private Deal of the Year
Buyouts 2002 Middle Market Deal of the Year
Buyouts 2003 Turnaround of the Year
Money Management 2005 Alternative Manager of the Year Nominee
Private Equity Intelligence 2006 WLR Recovery Fund II – One of the Twenty Most Influential Private Equity Funds of All Time

LISA EYLES BEESON
Head of Real Estate Mergers & Acquisitions
Lehman Brothers

Ms. Beeson has worked on transactions with an aggregate value of $250 billion over her 19 years of investment banking, including $90 billion in the lodging, gaming and real estate sectors.

Ms. Beeson has been the lead advisor on numerous real estate transactions including: Tishman Speyer’s acquisition of Archstone-Smith, Vornado’s proposed acquisition of EOP, Lightstone’s acquisition of Extended Stay Hotels, the sale of Centerpoint to CALPERS, Penn National Gaming’s proposed acquisition of Harrah’s Entertainment, the sale of Innkeepers to Apollo Investment Management, the sale of Capital Automotive to DRA Investors, General Growth Properties’ acquisition of Rouse, the sale of CRT Properties to DRA Investors, the merger of Lexington Corporate Properties Trust and Newkirk, the sale of CNL Restaurants to US Restaurant Properties, the merger of Cornerstone Properties and Colonial Group, Herbst Gaming’s acquisition of Sands, the sale of Heritage Properties to Centro Watt, the sale of Arden to General Electric, the sale of Sizeler to Morguard Corporation, and the sale of Prime Group to Lightstone LLC.

Other notable transactions Ms. Beeson has been lead advisor on include: Weyerhaeuser’s hostile acquisition of Willamette Industries, the merger of Smithkline Beecham and Glaxo Industries, the sale of Herald Media to Fortress, Welsh Carson’s acquisitions of US Oncology and Select Medical, Alcoa’s acquisition of Cordant Technologies, the merger of Smurfit Group and Stone Container Group, Phelps Dodge’s hostile acquisition of Cyprus Amax and Westvaco’s merger with Mead Corp. Prior to joining Lehman Brothers, Ms. Beeson was a Managing Director at Morgan Stanley and Wachovia Securities. Ms. Beeson received her BA in Economics and International Relations from the University of Pennsylvania
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KENNETH T. BERLINER
President
Peter J. Solomon Company

Kenneth Berliner is the President of Peter J. Solomon Company and heads its Mergers and Acquisition Group. In addition to his management responsibilities he spends the majority of his time sourcing and executing engagements and transactions for clients.

Mr. Berliner joined the firm in 1992 and has over 20 years experience advising clients on mergers and acquisitions, divestitures, restructurings and leveraged investments. He also has extensive experience in and dedicates much of his time to strategic advisory and principal assignments as well as public and private financings. Mr. Berliner has executed numerous transactions across a wide range of industries and is best known for his knowledge of the retail and distribution, consumer products, and healthcare sectors. He also covers and represents a number of financial sponsors.

At Peter J. Solomon Company, Mr. Berliner’s selected clients have included: Accenture Ltd., Advanstar Holdings Corp., Alliance One International, Allied Domencq plc, Au Bon Pain Co., Inc., Borders Group, Inc., Building Materials Holding Corporation, Cardinal Health, Inc., Centennial Cellular Corp., Crown Pacific, Dick’s Sporting Goods, Inc., DIMON Inc., Duff & Phelps Credit Rating Co., Galerias Preciados S.A., Guitar Center, Inc., Handleman Company, Hellman & Friedman LLC, Henry Schein, Inc., Kelso & Company, Leggett Stores, Inc., McKesson Corporation, McKinsey & Co., Michaels Stores, Mirant Corporation, Montgomery Ward & Co., Inc., Nichols Institute, Novatel Inc., Office Depot, Inc., Paxar Corporation, Perry Drug Stores, Inc., Phillips-Van Heusen Corporation, Pope Resources, LP, Pope & Talbot, Inc., Powerfood Inc., Priority Healthcare Corp., Reed International plc, Rohn Industries, Inc., Schlumberger Limited, Thomas H. Lee Company, The Tokyo Electric Power Company, Incorporated, Walgreen Company, Walter Industries, Williams-Sonoma, Inc., and Zenith Electronics Corporation.

Prior to joining PJSC, Mr. Berliner was a Vice President at Salomon Brothers, Inc., in its Mergers and Acquisitions Department. He has also worked as an Associate in Bank of America’s Leveraged Buyout and Acquisitions Group and as an accounting and tax specialist at Deloitte Haskins & Sells. Mr. Berliner received an M.B.A. from Harvard University and an A.B. from Duke University graduating magna cum laude with distinction.
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THOMAS BURNETT
EVP & Director of Research
Wall Street Access

Tom Burnett has over thirty years experience in managing domestic and international equity trading, risk arbitrage positions, and equity research. As managing director in charge of the international equity department at Merrill Lynch, he supervised trading positions in more than 300 separate foreign (non-U.S.) stocks, warrants, listed options, and ADRs, marketing the firm’s services to overseas and domestic retail and institutional customers. From 1977 to 1986, he was director of research and subsequently manager of the Merrill Lynch Risk Arbitrage Department, with primary responsibility for the management of more than $300 million of firm capital dedicated to risk arbitrage and listed options trading. Prior to joining Merrill Lynch in 1977, he spent five years at L.F. Rothschild & Co. with joint responsibility for all research relating to risk arbitrage and takeover stock positions. He also served as financial analyst at the Securities and Exchange Commission in Washington, D.C., from 1967 to 1972. He has published articles in Barron’s, Mergers and Acquisitions, and The Accounting Review and was an active faculty member of the New York Institute of Finance from 1985 to 1997. Since December, 1996, he has been the founder and principal author of the institutional research service Merger Insight®, which served institutional investors following large corporate takeovers. Merger Insight® was founded in partnership with Wall Street Access, an NYSE member firm, which integrated the service with its overall research offering in 2005. A Chartered Financial Analyst, Tom Burnett is a graduate of Williams College (B.A.) and the Graduate School of Business of Stanford University (M.B.A.). Mr. Burnett holds the Supervisory Analyst designation and the Series 86 and 87 licenses. In his current capacity, Mr. Burnett oversees the Wall Street Access Merger, Special Situations, Healthcare and Energy research efforts. Mr. Burnett holds the following NASD licenses: Series 7, 63, 4, 16, 65, 86 and 87.
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DAVID CAREY
Senior Writer
The Deal
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STEVEN DRESNER
President
Dresner Partners

Mr. Dresner founded Dresner Partners in 1991 to provide formerly exclusive Wall Street investment banking services to middle market businesses. His distinguished corporate finance career spans nearly 25 years, including mergers, acquisitions, debt and equity financing, recapitalizations and international transactions. In addition to his transactional experience, Mr. Dresner has led numerous valuation, fairness opinion and strategic financial consulting engagements. He has worked extensively in several industries including healthcare, business services, building products, textiles, industrial manufacturing, retailing and media. Prior to founding Dresner Partners, Mr. Dresner held management positions with First Chicago Corporation (JP Morgan Chase), Arthur Andersen (corporate finance and mergers and acquisitions practices), Heller Financial and GE Capital Corporation. A community leader, Mr. Dresner is on the boards of the Chicago Association for Corporate Growth, the Michael Polsky Center for Entrepreneurship at the University of Chicago, North Shore Congregation Israel, The Entrepreneurship Institute and Jobs for Youth. He is also on the Ravinia annual fund committee and is a member of The Economic Club of Chicago.
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HOWARD ELLIN
Partner & Deputy Head, Mergers & Acquisitions
Skadden, Arps, Slate, Meagher & Flom
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MARC FAECHER
Senior Vice President
TRC Companies, Inc.

Mr. Faecher is a Sr. Vice President with TRC’s Exit Strategy® Program. He routinely structures environmental liability transfers using TRC’s Exit Strategy® Program to facilitate merger and acquisition transactions or to enable the acquisition and redevelopment of single real estate assets or portfolios of sites. Mr. Faecher has conducted due diligence and structured, closed and managed liability transfer transactions involving hundreds of millions of dollars of environmental liability and cumulative assets valued in excess of several billion dollars.

Throughout his career he has handled matters involving virtually every area of environmental law on behalf of real estate developer and corporate clients involving operating businesses, single assets and portfolios of real estate. Mr. Faecher has remediation risk management and cost reduction experience at hundreds of sites under various State and Federal cleanup programs throughout the country. Prior to joining TRC Mr. Faecher was a Partner in a major New Jersey law firm and specialized in the cleanup and sale of impaired real estate and Brownfield redevelopment.

As the national leader in liability management and risk transfer, a broad range of companies look to TRC Companies, Inc. (NYSE: TRR) to turn liabilities into corporate and community opportunities in the midst of mergers, acquisitions, and divestitures. Through its market-leading Exit Strategy® Program, TRC offers a unique solution to close transactions and to relieve environmental liabilities-forever. By transferring liability for a single contaminated site or a portfolio of assets to TRC, Exit Strategy® reduces corporate costs, expedites site restoration and allows companies to focus on their core business operations. In combination with the assumption of liability, TRC also acquires and redevelops impaired properties. TRC has successfully structured, closed and managed environmental liability transactions having a cumulative re-positioned asset value of $5.9 billion and aggregate environmental liability of $480 million.
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LOUIS FRIEDMAN
Vice Chairman Investment Banking
Bear Stearns

Mr. Friedman is a Vice Chairman of Investment Banking and Global Chairman, Mergers & Acquisitions. He has served as financial advisor on many significant transactions in telecommunications, media and other consolidating industries. In the wireless industry, he has advised Deutsche Telekom on its acquisitions of VoiceStream and Powertel; Orange plc on its sale to France Telecom; Western Wireless and Midwest Wireless on their respective sales to Alltel; Weather Investments on its purchase of Wind Telecomunicazioni; Dobson Communications in its recapitalization and acquisition of American Cellular, SunCom in its asset swap with Cingular and the pending sale of Rural Cellular to Verizon. He has also advised Qwest Communications in its merger with US West and simultaneous unsolicited offer for Frontier; R.H. Donnelly in its purchases of Dex Media, Sprint’s directories business and SBC’s Illinois directories; Thomson Corporation in its purchase of Information Holdings; News Corp. in its acquisition of Chris Craft Industries, BHC and United Television, and UPS in its acquisition of Overnite Express.
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PETER GOTTSEGEN
Managing Partner
CAI

Peter M. Gottsegen is a managing partner of CAI Partners, a private equity firm with offices in New York, Toronto, Vancouver and Montreal, which he helped to found in 1989. Prior to that, he was a General Partner of Salomon Brothers in charge of the Firm’s International Investment Banking operations. In that capacity, he was responsible for all of Salomon’s corporate finance activities outside the U.S. Prior to joining Salomon Brothers in 1974, Mr. Gottsegen was a Vice President in the corporate finance department of Kuhn, Loeb & Co.

Mr. Gottsegen is a former director of Aster-Cephac SA, IVAX Corporation, MIST Inc., Sunquest Vacations Limited, Zalev Metals Inc. and Zenith Laboratories Inc., and currently serves as a director of Country Style Food Services Inc., DynaPlas Limited and Shred-Tech Inc. He is a member of the Council on Foreign Relations, Vice Chairman of the Milbank Memorial Fund, Trustee of the International Institute of Education and Director of the Toronto Symphony Orchestra. He had also been Chairman of Caramoor Center for Music and the Arts and a Trustee of The Nature Conservancy of New York State. Mr. Gottsegen received an M.B.A. from the Wharton School of the University of Pennsylvania and a B.S. from Georgetown University.
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IAN A. HARTMAN
Partner
Dechert LLP

Ian A. Hartman is a partner in the corporate and securities, private equity, and mergers and acquisitions groups. Mr. Hartman has extensive experience in mergers, acquisitions, dispositions, public and private offerings of debt and equity securities, bank financings, venture capital investments, proxy contests, Special Committee representations and advising publicly traded companies on federal securities law, corporate governance, and Pennsylvania corporate law matters. Examples of significant transactions that Mr. Hartman has handled in recent years include:
• Crown Holdings, Inc. in numerous domestic and international transactions, including its $2.4 billion refinancing, which included collateral sharing and intercompany arrangements to accommodate the complex international nature of Crown’s assets, and the $750 million sale of Crown’s plastic closures business to Paris-based PAI Partners, which involved 29 plants in 15 countries
• Great-West Lifeco Inc., an affiliate of the Power Corporation of Canada, in its $3.9 billion acquisition of Putnam Investments from Marsh & McLennan Companies, Inc.
• Lincoln Financial Corporation in the management buy-out of Delaware International Advisors Ltd., a U.K.-based investment adviser, to an affiliate of private equity firm Hellman & Friedman
• Berwind Group in its acquisition of Elmer’s Products, Inc., the manufacturer of Elmer’s Glue, from an affiliate of Kohlberg Kravis Roberts & Co
• Trian Fund Management, L.P. in connection with Pennsylvania law aspects of its proxy contest to elect directors to the board at HJ Heinz Company
• Constar International Inc. in its $550 million initial public offering and concurrent debt placement
• Aga Foodservice Group plc in several acquisitions, including the Amana Commercial Microwave business from Maytag and Whirlpool
• Liberty Associated Partners, L.P. in venture capital investments including Current Communications Group and XOS Technologies, Inc.
Education: The Pennsylvania State University, B.S., with high distinction, 1994; Harvard Law School, J.D., magna cum laude, 1998.
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DAVID JOHNSON
VP, Corporate Development
IBM

Mr. Johnson is responsible for IBM’s Non-Organic Growth Strategy; acquisitions, divestments and equity transactions; and acquisition integration, a position he has held for the last five years. Since joining IBM in 1981, he has been vice president of Finance, Technology Group where he was responsible for Finance, IT and fulfillment of IBM’s $18B Technology Group. Prior to that he was vice president of Finance, Storage Division where he was responsible for all financial functions of the $8B Storage Division. Before that he was finance director Product and Brand Finance, PC Division where he was responsible for financial support of product and brand functions of PC Company. He also held several management positions in US Sales Organization and Customer Offerings. He is a graduate of Boston College, holding a BA degree in English/Accounting and MBA in Finance.
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MICHAEL J. KAPLAN
Managing Director, Corporate Ratings
Health Care Team Leader
Standard & Poor’s

Michael J. Kaplan is a Managing Director in Standard & Poor’s Industrial Ratings Group and coordinates the activities of the global HealthCare team. Michael has been associated with Standard & Poor’s for some 30 years, and since 1983, has specialized in the analysis of companies providing health care services, supplies and equipment, and pharmaceuticals. As the Health Care team leader, he has broad and deep knowledge of health care issues, highlighted by award-winning roles at Standard and Poor’s in the development of health care rating criteria and in the publishing arena.

He has extensive discussions with leaders in the health care field as a part of the rating process, and shares his perspective on health care developments in a variety of public forums, including electronic and print media. Michael also has ongoing dialogue with Standard & Poor’s analysts in health-related rating sectors in the Public and Structured Finance departments, as well as in the Insurance Services area.

Michael holds an M.B.A. from New York University’s Graduate School of Business and a B.S. from Brooklyn College of the City University of New York. He also is a member of the New York Society of Security Analysts.
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JOHN KRIZ
Managing Director, Real Estate Finance
Moody’s Investors Service

John J. Kriz is Managing Director of Real Estate Finance at Moody’s, which is devoted to the ratings of REITs and other commercial real estate firms globally. In previous positions at Moody’s, Mr. Kriz has been involved in the analysis of sovereign and sub-national governments, supranational organizations, mutual funds, P&C insurers, mortgage insurers and mortgage banks, GSEs, reinsurers, international commercial and merchant banks, securities firms, thrifts and finance companies.

Mr. Kriz holds an MBA from the Kellogg School of Management at Northwestern University in Illinois, at which he was an F.C. Austin Scholar, as well as a Master of Arts in Political Science from The Graduate School at Northwestern, at which he was a Fellow of the Graduate School and a Teaching Fellow. Mr. Kriz was graduated cum laude with a Bachelors of Arts in Political Science, Economics and French from St. John’s University in Minnesota.

Mr. Kriz is a member of NAREIT, ARES, NMHC, ASHA, PREA, NCREIF, NIC and ICSC. He is also a member of the Advisory Board of the Real Estate Institute of New York University, and of the ICSC North American Research Advisory Task Force.
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MICHAEL J. LYONS
Senior Managing Director
Lincolnshire Management, Inc.

Michael J. Lyons is a Senior Managing Director of Lincolnshire Management. Mr. Lyons serves on the Investment Committee and is responsible for all deal processing and portfolio management teams. Mr. Lyons began his affiliation with Lincolnshire in 1994 when he was Chief Operating Officer at one of its portfolio companies. Since joining he has been the linchpin in many of Lincolnshire’s most successful deals, including Amports, BMS and Prince Tennis. Mr. Lyons has significant operating experience, having served as President, COO and CFO for a number of middle market companies involved in the consumer products and printing industries. Mr. Lyons’ experience includes the successful execution of several financial recapitalizations and operational restructurings for manufacturing, distribution and service companies. Mr. Lyons started his career as a CPA with Price Waterhouse. Mr. Lyons is a graduate of Boston University, summa cum laude, (B.S.B.A. 1981) and Harvard University (M.B.A. 1988).
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ROGER MARINZOLI
Vice President, Mergers & Acquisitions
Wyndham Worldwide Corporation

Roger Marinzoli serves as Vice President of mergers & acquisitions and strategic initiatives for Wyndham Worldwide Corporation, a Fortune 500 hospitality and leisure company. He has 14 years of experience in the global M&A and financing practices, as both a corporate advisor and as a principal investor. Marinzoli coordinates the M&A function for the Wyndham Worldwide companies, identifying areas of greatest growth and investment opportunities, analyzing and evaluating identified M&A targets and driving comprehensive valuation, due diligence & negotiation efforts. Marinzoli additionally coordinates the company’s strategic planning & analysis process and manages key strategic financial initiatives at the corporate level.

In prior financial roles, he served as an M&A and corporate finance investment banker with Lehman Brothers, and as a venture capital principal & advisor for an international investment company capitalized by Lehman Brothers executives. Before joining Wyndham, he served a 2-year appointment as the executive director of a New Jersey State Commission that focused on public policy issues in business and education.

In addition to traditional M&A activities, his experience includes strategic development, private equity funding and public equity & debt financing. Geographically, he has executed transactions or assessed opportunities in most developed and emerging markets, especially in Europe, Latin America, and Asia. He has worked across a variety of industries, including real estate, hospitality, telecommunications, power, financial services, biotechnology and nanotechnology.

Roger Marinzoli is a graduate of Georgetown University, where he earned a bachelor’s degree in international relations, and he holds a master’s degree in international economics from The Johns Hopkins University. His academic credentials include international finance lectures at The Wharton School and The Johns Hopkins University and the publication of articles in industry journals. He held a term membership with the Council of Foreign Relations and served on a study group for European Federal Trust.
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ROBIN MARSHALL
Partner
3i

Robin is a founding Partner of 3i US Growth Capital. Robin joined 3i in 2000 and has worked in the UK on Venture Capital, Growth and Buyout deals. Most recently he was the Managing Director of 3i UK Regions. Since January 2006, Robin has been a Partner in 3i’s US Growth Equity business based in New York. Over his investing career, Robin has been involved in investments in Ben Sherman, Careshare, Ardana Bioscience, Canvas Holidays, Local Press, Epcon Offshore, Petrochem Carless, and Energy Development Partners. Prior to joining 3i, Robin was with Procter & Gamble and McKinsey & Company. Robin graduated from the University of Glasgow, and was a Post Graduate Thouron Scholar at the University of Pennsylvania. Robin is Vice-Chairman of the Association for Corporate Growth.
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MATT MILLER
Senior Writer
The Deal
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CHRISTINA MOHR
Managing Director
Citigroup

Christina Mohr is a Managing Director in Mergers and Acquisitions in Citigroup’s Investment Banking Division. Her focus is in the media and telecommunications industries. Prior to joining a predecessor firm in 1996, Christina was a General Partner at Lazard Freres. In her 26 year career as an Investment Banker, she has covered a wide range of industries and led numerous high profile transactions. She earned an AB degree from Harvard University in 1978 and an MBA from Harvard Business School in 1982.
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GREG MONDRE
Managing Director
Silver Lake Partners

Greg Mondre joined Silver Lake in 1999 and is a Managing Director. He has significant experience in private equity investing and expertise in sectors of the technology and related growth industries. Prior to joining Silver Lake, Mr. Mondre was a principal at Texas Pacific Group, where he focused on private equity investments across a wide range of industries, with a particular focus on technology. Earlier in his career, Mr. Mondre worked as an investment banker in the Communications, Media and Entertainment Group of Goldman, Sachs & Co. He currently serves as a director of Avaya, Inc., IPC Systems, Inc. and Sabre Holdings. Previously he was a director of UGS Corporation and Network General Corporation. Mr. Mondre graduated from The Wharton School of the University of Pennsylvania with a B.S. in Economics.
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JOHN MORRIS
Assistant Managing Editor
The Deal
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JOHN NOONE
Managing Consultant
IBM

John A. Noone is a Managing Consultant with IBM’s Strategy and Change Practice. Mr. Noone has over 20 years of developing business strategies to transform business through leveraging all business and financial levers to realize maximum value. His focus has been in Mergers & Acquisitions, Business Strategy Assessments, and Transformational Operational Improvement. Over the years he has worked on Mergers & Acquisitions in the High Technology, Automotive, Aerospace, and Professional Services industries in a wide variety of roles including Due Diligence, Acquisition Integration, Divestures, and Post-Acquisition Transformation. Mr. Noone has received his MBA from the Wharton School of Business and Bachelors and Masters degrees in Engineering from the Massachusetts Institute of Technology.
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GREGORY PETERSON
Partner
PricewaterhouseCoopers

Greg is a partner in the PricewaterhouseCoopers’ Transaction Services practice serving global private equity clients. Previously, he ran our merger integration practice, The Accelerated Transition®, leading engagements for both strategic clients and LBO/private equity firms. In a career that spans 25 years, Greg has developed expertise in all of the disciplines relevant to mergers and acquisitions including strategic assessments, business and financial due diligence, transaction structuring, and pre- and post-merger integration. Greg has advised private equity firms and corporations on public and private, domestic and cross-border deals ranging in size from $5 million to more than $27 billion. His breadth of industry experience includes industrial products, consumer products, entertainment and media, retail, healthcare, business services, telecommunications and professional sports franchises. Greg received his MBA from the University of Texas in Austin. He is also a CPA and a graduate of the University of Illinois. He is a frequent commentator and contributor to The Daily Deal, a publication covering mergers and acquisition topics.
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DUSTY PHILIP
Managing Director
Goldman Sachs

Dusty is a Partner in M&A and Co-Head of the Raid Defense business for Goldman Sachs in the U.S. Dusty has been involved in many of the largest public company M&A transactions for the firm. He joined Goldman Sachs in the Mergers and Acquisitions Department in 1991 after receiving an MBA from the Tuck School at Dartmouth. Dusty was promoted to Managing Director in 1999 and Partner in 2000. Dusty received a BA from Amherst College in 1986 and worked for Lehman Brothers from 1987-89. Dusty’s recent transactions include the sale of Eastman Kodak Health Group to Onex Corporation, the merger of Fisher Scientific with Thermo Electron and the sale of American Power Conversion Corp. to Schneider Electric.
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CHARLES SIMMONS
Vice President, Corporate Development
Bristol Myers Squibb

Charles is responsible for corporate development activities for the Bristol-Myers Squibb Company on a global basis. These activities include investments, acquisitions, divestitures, joint ventures and related strategic collaborations and alliances. Charles joined Bristol-Myers Squibb in 2000. Prior to that he was an associate at the law firm of Sherman & Sterling. Charles holds a B.A. from Tufts University and a J.D. from Pace University.
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ADAM D. SOKOLOFF
Managing Director and Head of Financial Sponsors & Private Capital Group
Jefferies & Company, Inc.

Adam Sokoloff is a Managing Director and Head of the Financial Sponsors Group (FSG) in Jefferies’ New York office. FSG is responsible for coordinating the firm’s relationships, both in terms of origination and distribution, with a variety of private equity sources, including traditional financial sponsors and leveraged buyout firms, hedge funds, SPACs, alternative investment funds and financial entrepreneurs. Mr. Sokoloff also sits on the Firm’s Investment Banking Operating Committee.

Prior to joining the firm in May 2002, Mr. Sokoloff was a Managing Director for seven years at Bear, Stearns & Co. where he was a member of the Financial Sponsors Group and the Retail & Consumer Group. He began his career in 1984 as a Financial Analyst at Kidder, Peabody and subsequently served as an Associate and then a Vice President in the Corporate Finance Department at Drexel Burnham Lambert. During his career, he has completed more than 150 transactions totaling in excess of $15 billion, including public and private equity financings, leveraged buyouts and recapitalizations, high yield, bank and mezzanine debt financings, buyside and sellside advisory assignments, restructurings, stock and bond buybacks and block sales of equity and debt. Mr. Sokoloff received an MBA from the J.L. Kellogg Graduate School of Management at Northwestern University and a BS in Economics from the Wharton School at the University of Pennsylvania.
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ROBERT TEITELMAN
Editor-in-Chief
The Deal
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VYVYAN TENORIO
Senior Editor
The Deal

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RICHARD A. VACCARI
Vice President, Mergers & Acquisitions
Sempra Energy

Richard A. Vaccari is Vice President of Mergers and Acquisitions for Sempra Energy, a San Diego-based Fortune 500 energy services holding company whose subsidiaries provide electricity and natural gas products and services. The Sempra Energy companies’ 14,000 employees serve more than 29 million consumers worldwide. In his current position, Vaccari is responsible for all strategic development activities.

Prior to this, Vaccari was vice president of Sempra Global, the umbrella for Sempra’s businesses operating in competitive energy markets, where he managed development for those businesses. He also was the managing director of Sempra Partners, an equity fund that teams with financial and energy counterparts to acquire attractive gas and power assets.

Prior to joining Sempra in 2003, Vaccari spent more than 20 years in investment banking, focusing primarily on the power sector. He began his career at Goldman Sachs as vice president of the Public Utility Group, and served as a managing director in the Global Power Group at Merrill Lynch. He was last at Credit Suisse First Boston where he was a senior managing director in the energy group and responsible for some of the largest client relationships in the Midwest.

Vaccari holds a master’s degree in business administration from the University of Chicago, Graduate School of Business and a bachelor’s degree in economics from the University of Pennsylvania.
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DANIEL WARD
Managing Director, Mergers & Acquisitions
UBS Securities LLC
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JAMIE WELCH
Head of Global Energy, Investment Banking Division
Credit Suisse Securities (USA) LLC

Jamie Welch is a Managing Director of Credit Suisse and Head of Energy Investment Banking, based in New York. The Energy Group comprises over 150 professionals and is one of the preeminent franchises on Wall Street. Mr. Welch joined Credit Suisse in 1997 from Lehman Brothers Inc. in New York, where he was a Senior Vice President in the global utilities & project finance group. Prior to this, he was a corporate attorney with Milbank, Tweed, Hadley & McCloy (New York) from 1992 to 1994 and before this was a banister and solicitor with Minter Ellison in Melbourne, Australia from 1990 to 1992.

Over the last five years Mr. Welch has been directly involved in transactions including mergers and acquisitions, financings and restructurings, totaling in excess of $100 billion. Mr. Welch has a Bachelor of Law Degree from the Queensland University of Technology, and a Diploma in International Investment and Analysis from the Securities Institute of Australia.
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PARKER A. WEIL
Group Head, Managing Director
Merrill Lynch Energy & Power Group

Parker has 18 years of investment banking experience, working on Mergers & Acquisitions, private equity investments, equity financings and debt financings for a number of companies in a variety of industries. He currently has responsibility for managing the Merrill Lynch relationship at investor owned energy and power companies including Dominion Resources, Exelon, PSEG, Covanta, Allete and Ottertail. In addition Parker is actively involved in identifying and financing emerging renewable energy companies. Parker graduated with a B.A. from University of Pennsylvania and an MBA from the JL Kellogg School of Management. He currently lives in New Jersey with his wife and 3 children.
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SETH WEINTROB
Managing Director
Morgan Stanley Real Estate

Seth Weintrob is an Executive Director of Morgan Stanley. Seth has nine years of investment banking experience, and has completed over 60 transactions aggregating over $80 billion in value. Seth joined Morgan Stanley Real Estate as a financial analyst in 1996, and has also spent time in Morgan Stanley’s Mergers, Acquisitions and Restructuring department. Seth has significant transaction experience in mergers and acquisitions, as well as secured and unsecured debt financing, preferred and equity financing, private equity investment and private capital raising. Seth received an AB in Economics, cum laude from Harvard University in 1996.
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STEPHEN ZIDE
Managing Director
Bain Capital LLC

Steve Zide has been a Managing Director of Bain Capital, a leading global private investment firm with approximately $50 billion in assets under management, since 2001. From 1998 through 2000, he was a Managing Director of Pacific Equity Partners, an affiliate of Bain Capital based in Sydney, Australia.

Since joining Bain Capital in 1997, Mr. Zide has played an integral role on a number of key transactions such as HD Supply, Innophos Holdings, Keystone Automotive Operations, Sensata Technologies and Boart Longyear. In addition, he currently sits on the Board of Directors of these corporations, as well as serves as a Director of Broder Bros. Co. Mr. Zide’s deep international investment expertise is essential to strengthening the firm’s global positioning, which, most recently, was reflected by the acquisition of Edgars Consolidated Stores (EdCon), the largest apparel retailer in South Africa.

Prior to joining the firm, Mr. Zide was a partner of the law firm of Kirkland & Ellis, where he co-founded the law firm’s New York office. While at Kirkland & Ellis, Mr. Zide specialized in representing private equity and venture capital firms.

Mr. Zide received an M.B.A. from Harvard Business School, a J.D. from Boston University School of Law, where he was an Editor of the Law Review and currently serves on the Board of Visitors, and a B.A. from the University of Rochester.

The Deal’s 2008 M&A Outlook provides a unique opportunity to position yourself and/or your firm as thought leaders in a face-to-face environment with the corporate and financial executives who will forge new deals in 2008. To be considered for a speaking role, please send your information to:

 http://www.federalreserve.gov/boarddocs/speeches/2006/200605162/default.htm

Remarks by Chairman Ben S. Bernanke
At the Federal Reserve Bank of Atlanta’s 2006 Financial Markets Conference, Sea Island, Georgia
May 16, 2006

Hedge Funds and Systemic Risk

Thank you for inviting me to speak today. In keeping with the theme of this conference, I will offer some thoughts on the systemic risk implications of the rapid growth of the hedge fund industry and on ways that policymakers might respond to those risks.

The collapse of Long-Term Capital Management (LTCM) in 1998 precipitated the first in-depth assessment by policymakers of the potential systemic risks posed by the burgeoning hedge fund industry. The President’s Working Group on Financial Markets, which includes the Federal Reserve, considered the policy issues raised by that event and, in 1999, issued its report, Hedge Funds, Leverage, and the Lessons of Long-Term Capital Management. The years since then have offered an opportunity to consider whether the Working Group’s recommendations for addressing those issues have been effective and whether new concerns have arisen that warrant an alternative approach.

LTCM and the Working Group’s Recommendations
As the title of the report indicated, the Working Group focused on the potential for leverage to create systemic risk in financial markets. The concern arises because, all else being equal, highly leveraged investors are more vulnerable to market shocks. If leveraged investors default while holding positions that are large relative to the markets in which they have invested, the forced liquidation of those positions, possibly at fire-sale prices, could cause heavy losses to counterparties. These direct losses are of concern, of course, particularly if they lead to further defaults or threaten systemically important institutions; but, in addition, market participants that were not creditors or counterparties of the defaulting firm might be affected indirectly through asset price adjustments, liquidity strains, and increased market uncertainty.

The primary mechanism for regulating excessive leverage and other aspects of risk-taking in a market economy is the discipline provided by creditors, counterparties, and investors. In the LTCM episode, unfortunately, market discipline broke down. LTCM received generous terms from the banks and broker-dealers that provided credit and served as counterparties, even though LTCM took exceptional risks. Investors, perhaps awed by the reputations of LTCM’s principals, did not ask sufficiently tough questions about the risks that were being taken to generate the high returns. Together with the admittedly extraordinary market conditions of August 1998, these risk-management lapses were an important source of the LTCM crisis.

The Working Group’s central policy recommendation was that regulators and supervisors should foster an environment in which market discipline–in particular, counterparty risk management–constrains excessive leverage and risk-taking. Effective market discipline requires that counterparties and creditors obtain sufficient information to reliably assess clients’ risk profiles and that they have systems to monitor and limit exposures to levels commensurate with each client’s riskiness and creditworthiness. Placing the onus on market participants to provide discipline makes good economic sense; private agents generally have strong incentives to monitor counterparties as well as the best access to the information needed to do so effectively.

For various reasons, however, creditors may not fully internalize the costs of systemic financial problems; and time and competition may dull memory and undermine risk-management discipline. The Working Group concluded, accordingly, that supervisors and regulators should ensure that banks and broker-dealers implement the systems and policies necessary to strengthen and maintain market discipline, making several specific recommendations to that effect. The Working Group’s recommendations on this point have largely been followed. Domestically, regulatory authorities issued guidance on risk-management practices, and bank supervisors now actively monitor and conduct targeted reviews of banks’ dealings with hedge funds. The Securities and Exchange Commission (SEC) intensified its risk-management inspections of the larger broker-dealers after LTCM. Internationally, both the Basel Committee on Banking Supervision and the International Organization of Securities Commissions produced papers on sound practices in dealings with highly leveraged institutions, and the Basel Committee conducted a series of follow-up studies.

An alternative policy response that the Working Group considered, but did not recommend, was direct regulation of hedge funds. Direct regulation may be justified when market discipline is ineffective at constraining excessive leverage and risk-taking but, in the case of hedge funds, the reasonable presumption is that market discipline can work. Investors, creditors, and counterparties have significant incentives to rein in hedge funds’ risk-taking. Moreover, direct regulation would impose costs in the form of moral hazard, the likely loss of private market discipline, and possible limits on funds’ ability to provide market liquidity.

In focusing on counterparty risk management in its recommendations, the Working Group did not intend to prevent failures in the hedge fund industry. Hedge funds offer their investors high prospective returns but also high levels of risk. Experienced investors know, or should know, that in any given year some hedge funds lose money for their investors and some funds go out of business. Those occurrences are only normal and to be expected in a competitive market economy. The Working Group’s recommendations were aimed, instead, at ensuring that when hedge funds fail, as some inevitably will, the effects will be manageable and the potential for adverse consequences to the broader financial system or to real economic activity will be limited.

Effectiveness of the Working Group’s Approach
Has the approach proposed by the President’s Working Group worked? Any answer must be provisional, but, to date, it apparently has been effective. Since the LTCM crisis, ongoing improvements in counterparty risk management and the resultant strengthening of market discipline appear to have limited hedge fund leverage and improved the ability of banks and broker-dealers to monitor risk, despite the rapidly increasing size, diversity, and complexity of the hedge fund industry. Many hedge funds have been liquidated, and investors have suffered losses, but creditors and counterparties have, for the most part, not taken losses. The general perception among market participants is that hedge funds are less highly leveraged today than in 1998 though, to be sure, meaningful and consistent measurements of leverage are not easy to come by and many newer financial products embed significant leverage in relatively nontransparent ways.

According to bank supervisors and most market participants, counterparty risk management has improved significantly since 1998. Some of this progress is due to industry-led efforts, such as two reports by the Counterparty Risk Management Policy Group (CRMPG) that lay out principles that institutions should use in measuring, monitoring, and managing risk. Reviews conducted by bank supervisors in 2004 and 2005 indicated that banks have become more diligent in their dealings with hedge funds. In most cases, substantial resources have been devoted to expanding and improving the staffing of the risk-management functions related to hedge fund counterparties. Dealers universally require hedge funds to post collateral to cover current credit exposures and, with some exceptions, require additional collateral, or initial margin, to cover potential exposures that could arise if markets moved sharply. Now, risk managers can more accurately measure their current and projected exposures to hedge fund counterparties, and more firms use stress-testing methodologies to assess the sensitivity of their exposures to individual counterparties if the market moves substantially.

Despite this progress, some concerns about counterparty risk management remain and may have become even more pronounced given the increasing complexity of financial products. I will note four of these concerns. First, hedge funds are profitable customers for dealers, and our supervisors are concerned that competition for hedge fund business has eroded initial margin levels. Second, given the increasing volume of complex transactions with hedge funds, we are also concerned whether counterparty exposures in such complex transactions are being measured accurately. Supervisors are monitoring banks with these issues in mind. Third, our supervisors are concerned that more extensive stress-testing should be done. Although stress-testing of exposures at the level of the individual hedge fund counterparty is becoming more common, still-wider application of this technique would be useful. Similarly, aggregate stress tests–by which a dealer evaluates its exposure to the hedge-fund sector in the event of a large market move–merit wider use. Aggregate stress tests are a desirable complement to stress tests of individual hedge fund counterparties because funds sometimes imitate each others’ strategies or choose strategies that are affected by common market factors. Supervisors are encouraging the expanded use of stress-testing when it is appropriate. Fourth, supervisors are concerned that the assessment of counterparty risks should be better tied to the amount of transparency offered by hedge funds. In particular, good risk management should link the availability and the terms of credit granted to a hedge fund to the fund’s willingness to provide information on its strategies and risk profile. Our supervisors are pushing banks to clearly link transparency with credit terms and conditions.

Since the Working Group report was issued, hedge funds have greatly expanded their activities and strategies, and their interactions with counterparties and creditors have accordingly become more complex. The continuing challenge for supervisors, counterparties, and hedge funds is to ensure that rigorous and appropriate methods of risk management are brought to bear even as institutions, instruments, and markets change. Two recent challenges of note are the spread of prime brokerage services and the emergence of operational issues in the settling of trades in newer types of over-the-counter (OTC) derivatives, particularly credit derivatives.

Hedge funds have long used arrangements that allow them to execute trades with several dealers but then to consolidate the clearing and settlement of their trades at a single firm, the “prime broker.” The prime broker typically provides financing and back-office accounting services to the hedge fund as well as settlement services. In the past couple of years, prime brokerage has expanded beyond cash trades for securities to include foreign exchange and OTC derivative trades, and more firms are offering prime brokerage services.

Prime brokerage poses some unique challenges for the management of counterparty credit and operational risk. Prime brokers must ensure that they have adequate information and controls to protect against counterparty credit risk arising both from the client and from the executing dealer. They also must implement internal controls to monitor and track transactions executed as part of the prime brokerage agreement and to ensure that the transactions meet the terms of the agreement. Supervisors of firms that offer prime brokerage services, particularly supervisors of new entrants, must ensure that the firms are fully aware of the risks involved and effectively manage them.

The proliferation of new financial products also poses risk-management challenges, including challenges on the operational side. For example, trading in credit derivatives has grown dramatically in recent years, and firms have had difficulties in processing and settling these and other OTC derivative trades in a timely way. These problems are not limited to hedge funds but affect all participants in the OTC derivatives market and all dealers in credit derivatives. Recently, supervisors in several jurisdictions, working with the Federal Reserve Bank of New York, have pushed firms to improve their processes for confirming and assigning trades. So far, good progress has been made, with private-sector participants meeting most of their objectives for reducing backlogs. Commitments are in place to effect still further improvement.

A noteworthy feature of these efforts is the cooperation among authorities. The Federal Reserve has devoted more effort in recent years to maintaining a dialogue with international supervisors, such as the U.K. Financial Services Authority, and we will continue to do so. Domestically, the Federal Reserve is coordinating with the SEC, which is the primary regulator of several large firms that deal in OTC derivatives or engage in prime brokerage activities.

Proposals for Creating a Database of Hedge Fund Positions
Following the LTCM crisis and the publication of the Working Group’s recommendations, the debate about hedge funds and the broader effects of their activities on financial markets abated for a time. That debate, however, has now resumed with vigor–spurred, no doubt, by the creation of many new funds, large reported inflows to funds, and a broadening investor base. Renewed discussion of hedge funds and of their benefits and risks has in turn led to calls for authorities to implement new policies, many of which will be topics of this conference. I will briefly discuss one of these proposals: the development of a database that would contain information on hedge-fund positions and portfolios.

It is commonly observed that hedge funds are “opaque”–that is, information about their portfolios is typically limited and infrequently provided. It would be more accurate to say that the opacity of hedge funds is in the eye of the beholder; the information a fund provides may vary considerably depending on whether the recipient of the information is an investor, a counterparty, a regulatory authority, or a general market participant. From a policy perspective, transparency to investors is largely an issue of investor protection. The need for counterparties to have adequate information is a risk-management issue, as I have already discussed. Much of the recent debate, however, has focused on the opacity of hedge funds to regulatory authorities and to the markets generally, which is viewed by some as an important source of liquidity risk. Liquidity in a particular market segment might well decline sharply and unexpectedly if hedge funds chose or were forced to reduce a large exposure in that segment.

Concerns about hedge fund opacity and possible liquidity risk have motivated a range of proposals for regulatory authorities to create and maintain a database of hedge fund positions. Such a database, it is argued, would allow authorities to monitor this possible source of systemic risk and to address the buildup of risk as it occurs. Various alternatives that have been discussed include a database maintained by regulators on a confidential basis, a system in which hedge funds submit position information to an authority that aggregates that information and reveals it to the market, and a public database with nonconfidential information on hedge funds.

I understand the concerns that motivate these proposals but, at this point, remain skeptical about their utility in practice. To measure liquidity risks accurately, the authorities would need data from all major financial market participants, not just hedge funds. As a practical matter, could the authorities collect such an enormous quantity of highly sensitive information in sufficient detail and with sufficient frequency (daily, at least) to be effectively informed about liquidity risk in particular market segments? How would the authorities use the information? Would they have the authority to direct hedge funds or other large financial institutions to reduce positions? If several funds had similar positions, how would authorities avoid giving a competitive advantage to one fund over another in using the information from the database? Perhaps most important, would counterparties relax their vigilance if they thought the authorities were monitoring and constraining hedge funds’ risk-taking? A risk of any prescriptive regulatory regime is that, by creating moral hazard in the marketplace, it leaves the system less rather than more stable.

A system in which hedge funds and other highly leveraged market participants submit position information to an authority that aggregates that information and reveals it to the market would probably not be able to address the concern about liquidity risk. Protection of proprietary information would require so much aggregation that the value of the information to market participants would be substantially reduced. Timeliness of the data would also be an issue.

A public database of nonproprietary information could provide the public with a general picture of hedge-fund activity without creating the false impression that the authorities were engaged in prudential oversight of hedge funds. Such a public database might demystify hedge funds, but it would not address the central policy concern that opacity creates liquidity risk.

I expect discussion and analysis of the potential costs and benefits of increased disclosures will continue, as well as suggestions about how such disclosures might be structured and disseminated. The important challenge is to structure any disclosures in a way that does not generate moral hazard or weaken market discipline.

Conclusion
In the final analysis, authorities cannot entirely eliminate systemic risk. To try to do so would likely stifle innovation without achieving the intended goal. However, authorities should (and will) try to ensure that the lapses in risk management of 1998 do not happen again. Private market participants, too, have their role to play in ensuring that such lapses do not recur. The principles articulated in the CRMPG’s reports are a good starting place for firms, and senior management should rigorously assess their operations against those principles and commit the resources to address deficiencies. Authorities’ primary task is to guard against a return of the weak market discipline that left major market participants overly vulnerable to market shocks. Continued focus on counterparty risk management is likely the best course for addressing systemic concerns related to hedge funds. This public policy approach does not entail the moral hazard concerns created by authorities’ monitoring of positions using a private database. Rather, a focus on counterparty risk management places the responsibility for monitoring risk squarely on the private market participants with the best incentives and capacity to do so.
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2006 Speeches

Liquidity Risk

Friday, 8 October 2004
Speech by Paul Sharma

The subject of my speech is liquidity risk. The Department which I head at the Financial Services Authority covers all prudential risks – market risk, credit risk, operational risk, insurance risk etc as well as of course liquidity risk – across the three sectors of banking, insurance and securities. My Department has of course therefore been heavily engaged in negotiating and implementing the reforms to the regulation of credit, market and operational risk in Basel 2 and the reforms to the regulation of insurance risk in our new realistic solvency regime. These reforms have been based on years of detailed work, extensive consultation and intensive negotiation and are now the subject of major implementation projects at the both the FSA and regulated firms. The reforms have succeeded in focusing attention on credit, market, insurance and operational risk. A vast literature, both regulatory and academic, exists on these risks. In sharp contrast almost no attention has been given to liquidity risk.

However this too is now changing and in my speech I will focus on two recent initiatives. Firstly there are the reforms set out in the FSA’s Consultation Paper 128 and in the feedback statement to that consultation paper. These reforms set out new rules and guidance on the non-quantitative aspects of liquidity risk management. The rules and guidance are due to come into force at the end of this year¹. Secondly there is the work of the Joint Forum of the Basel Committee and its international regulatory counterparts, IOSCO and the IAIS, in the securities and insurance fields. The Joint Forum is the senior international body, at present under the chairmanship of the FSA’s Gay Huey Evans, that looks at key regulatory issues that are of common interest across the three sectors. It has set up a sub-group under the joint chairmanship of Richard Mead (New York Federal Reserve) and myself to report on liquidity risk. Joint Forum does not itself legislate regulatory standards but in the past its finding and recommendations have lead to others carrying out significant regulatory reforms. For example the initiative which lead to the EU directive on conglomerates was based initially on a Joint Forum report.

Prior to these recent initiatives we have grown so accustomed to extensive regulatory and academic discussion of credit risk, market and even operational risk that the comparative absence until recently of liquidity risk from the regulatory debate no longer seems surprising. Actually it should surprise us a great deal. Historically in the 1930s and again in the 1970s liquidity runs have been the causes of multiple banking failures within the UK leading to systemic instability and there are of course much more recent examples if one looks outside the UK. Also analytically if one looks at the basic business model it is obvious that liquidity is one of the fundamental risks that arises in banking.

Within their banking books, banks borrow short and lend long. This gives rise to three obvious risks – credit risk on the lending and long-term interest rate risk and liquidity risk from the mismatch between the term structure of the assets and liabilities. Basel 2 sets out regulatory standards for the first two risks but is almost silent on the liquidity. Within their trading books, banks and investment banks hold trading assets backed by regulatory capital calculated on a VaR basis that assumes that the market risk from those assets could be mitigated within a short period of time. This in turn assumes that those assets are liquid although there is increasing evidence that in recent years banks and investment banks have started including significant volumes of illiquid assets in their trading books.

I shall speak about the latest trends in the regulatory responses to these risks in a moment but before doing so I shall first set out what I mean by liquidity risk. A conventional analysis of liquidity risk distinguishes between funding liquidity risk and market liquidity risk.

• Funding liquidity risk is the risk that the counterparties who provide the bank with short-term funding will withdraw or not roll over that funding, e.g. there will be a ‘run on the banks’ as depositors withdraw their funds.
• Market liquidity risk is the risk of a generalised disruption in asset markets that make normally-liquid assets illiquid.

The first is more important in the context of the maturity transformation that occurs in the banking book. The second is more important in the context of tradable assets in the trading book.

However rather than define liquidity risk in this rather conventional way I would prefer to describe it using some of the concepts being developed in the Joint Forum work. This sees liquidity risk in terms of adverse liquidity outcomes that arise from a combination of an external or non-liquidity trigger event and an internal vulnerability.

• An obvious adverse liquidity outcome is (1) the inability to pay liabilities as they fall due. However many firms take liquidity risk further than this. They include as adverse liquidity outcomes (2) realising a market loss as a result of the premature or force sale of assets to raise liquidity and (3) loss of business opportunity or franchise due to a lack of liquidity. This broader vision of liquidity is also relevant to regulators. It illustrates the link between liquidity risk and market risk. There is a correlation between the times at which market volatility – and therefore market risk – is highest and times at which the market also loses its liquidity. It also illustrates the focus on liquidity risk which regulators need to have where a bank is of systemic importance such that the loss of its business franchise would disrupt the financial system as a whole.
• Internal vulnerabilities to liquidity risk arise principally either because (1) assets are in relative terms less liquid than liabilities or (2) a bank has granted its counterparties significant optionality. The first point here draws attention to the role of asset-liability matching in creating and managing liquidity risk. Neither illiquid assets nor liquid liabilities (that is liabilities whose timing is uncertain) in themselves create liquidity risk. It is the mismatch which creates the risk. This may sound as if I am stating the obvious but conventional regulatory approaches often focus in a one-sided way on the virtue of liquid assets, as arguably our sterling stock liquidity regime for banks does, or on the harm from illiquid assets, as arguably our illiquid assets deduction rules for investment firms do. The second point here draws attention to another fundamental aspect of liquidity risk. It is part of the business model of banks and investment banks to do business with their customers and counterparties in ways which give those customers or counterparties a significant degree of choice, that is optionality, as to the timing of cash outflows to them. For example customers who hold sight deposits may withdraw those deposits at any time. Counterparties who are providing short term secured or unsecured funding may choose not to roll over that funding. This leaves banks and, to a lesser extent, investment banks open to the risk that customer or counterparty behaviour will alter suddenly and radically – the so-called risk of a ‘run on the bank’. This in turn leads us to focus on reputational risk and contagion risk of which more in a few moments.
• External or non-liquidity triggers need to combine with these internal vulnerabilities to create an adverse liquidity outcome. The Joint Forum work identifies three main triggers. First a non-liquidity risk may crystallise either directly leading to the creation of a short term liability or to the loss of use of a short term or liquid asset or indirectly leading to that result by first causing damage to reputation that in turn leads to a change in customer or counterparty behaviour. Second a similar result may follow due to reputational damage that occurs due to misinformation, misunderstanding or overreaction in the market. A particularly relevant example of this is the contagion damage that occurs to a bank’s reputation when a similar but unrelated bank suffers financial or other difficulties. Third a more general market disruption of liquidity may frustrate a bank’s ability to raise unsecured funds and/or to convert assets into liquidity either through repos or secured lending or through sale.

In risk management terms preventing trigger events, reducing vulnerabilities and, when they occur, mitigating adverse outcomes are all important strategies. In comparison conventional regulatory responses appear somewhat one-dimensional focusing nearly exclusively on a few narrow methods of reducing one particular aspect of vulnerabilities. The next stages of the FSA’s reform of its regulatory approach to liquidity risk have, and will have, a broader, but also more flexible, regulatory focus. I shall now turn to this.

In discussing the regulatory approach to liquidity risk it is important to distinguish between quantitative (pillar 1), qualitative (pillar 2) and disclosure (pillar 3) requirements. Turning first to pillar 1 we have at the UK level at present a patchwork of different regimes as set out in the various interim prudential sourcebooks. At the EU and international levels there is as yet no harmonisation of quantitative liquidity rules. Following Basel 2 and the draft EU Capital Requirements Directive this remains by the far the most important aspect of banking regulation on which there are no internationally or EU agreed standards.

As part of the FSA’s programme to introduce an Integrated Prudential Sourcebook that treats like risks in a like manner regardless of the sector in which they occur, the FSA set out in Discussion Paper 24 in October 2003 some ideas of how a single quantitative regime across the banking, building society and investment banking sectors might be created.

In principle there are three broad approaches that a firm might use in the quantitative control of its liquidity risk.

• The stock approach. The firm maintains stocks of liquid instruments that can be drawn upon when needed. The amount, quality and nature of the stock of assets are most typically calibrated to deal with crisis events but the stock of assets is of course also potentially available to deal with normal variations in cash flows.
• The cash flow matching approach. The firm attempts to match cash outflows and inflows. The cash flow matching approach may be applied using solely contractual cash flows or using adjusted cash flows. Adjusted cash flows adjust the contractual cash flows to take account of the likely behaviour of counterparties and/or non-contractual cash outflows needed to preserve the business franchise. These adjustments may be made either on the basis of expected normal conditions or assuming stress conditions.
• The mixed approach. This approach combines elements of the cash flow matching approach and the stock approach. Adjusted cash flows are projected as under the cash flow matching approach except that it is assumed that the stock of liquid assets are not merely held to maturity but are used to generate cash inflows either through their sale or through repo or other secured lending transactions. This adaptation of the cash flow model is targeted to stress environments.

The existing IPRU regimes for banks and building societies follow a stock approach for large banks and cash flow matching and mixed approaches for smaller banks and for building societies. However the detail of these various different existing approaches as expressed in the Interim Prudential Sourcebook is open to criticism as needing to be update for modern market developments and also to create a level playing field across the sectors on the basis, as already explained, of “like risk like treatment”. For example the stock liquidity approach that is at present used for large banks suffers from the defects that it only applies to sterling, it only accepts a narrow range of assets as stock liquidity assets and it is not the main way large banks actually manage their liquidity risk for internal risk management purposes. The existing regime for investment firms uses an approach based on illiquid asset deductions which in effect fuses and conflates capital rules and liquidity rules.

Discussion Paper 24 set out ideas for a new integrated approach to Pillar 1 requirements for liquidity risk. It basically followed the ‘mixed approach’ described above. The responses to the discussion paper received from the industry and others supported the idea that there was a need for reform but also, as we expected, pointed out that significant further work was needed. The ideas in the discussion paper were not yet fit to be taken forward to a consultation paper stage. In particular four important points were made by industry commentators with which we agree. First, the outline new approach set out in the discussion paper was far too prescriptive and detailed. Second, it would create new divergences between the way in which liquidity risk was regulated and ways in which it was managed by firms for their own internal purposes, especially for the investment banking sector which typically uses an approach closer to the stock approach. Third it placed too much weight on a Pillar 1 approach of the regulator setting hard quantitative limits as opposed to relying upon and developing further the FSA’s own Pillar 2 ideas that rest on the concept of the senior management of a firm forming its own view – subject to supervisory review – as to their firm’s liquidity needs. Fourth it risked creating a Pillar 1 regime for liquidity in the UK that was significantly out of step with the emerging international regulatory trends and was not sufficiently cross-sectoral in its approach especially for mixed banking-insurance conglomerates. The FSA will not therefore be taking forward the Discussion Paper 24 approach to Pillar 1 liquidity standards to the consultation stage. Instead the next steps in our work on the reform of liquidity risk will be to implement our existing Pillar 2 proposals and to participate further in the international work on Liquidity. That is in particular the Joint Forum sub-group which I co-chair. Further domestic reform will await the outcome of this international work and will be reassessed in the light of that outcome.

The FSA set out its Pillar 2 requirements in its feedback statement to Consultation Paper 128. This sets out rules and guidance that are due to come into force at the end of this year that require a firm:

• to carry out stress testing and scenario analysis of liquidity needs;
• to put in place contingency funding plans for dealing with a liquidity crises were it to occur; and
• to document its liquidity risk management policy.

These rules and guidance anticipate and amplify the requirement set out in the draft EU Capital Requirement Directive that firms have in place “policies and processes for the measurement and management of their net funding on an on-going and forward-looking basis”. The directive adds that “Alternative scenarios shall be considered and the assumptions underpinning the net funding position shall be regularly reviewed” and that “Contingency plans to deal with liquidity crises shall be in place”.

Turning now to Pillar 3 (disclosure requirements), this is the aspect of the regulation of liquidity risk that has received the least attention of all at either the UK or international level. However the Joint Forum sub-group is now looking at this and the FSA will await its findings.

Drawing my remarks to a conclusion I would repeat the thought with which I started. Liquidity risk has perhaps for too long been overlooked as a focus of attention for regulatory reform. That is now changing both at the UK and International levels.

 

by Paul Sharma - Head of Prudential & Accounting Standards, FSA.

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¹See the FSA’s letter of 15 September to trade associations on the PSB Implementation page (under the Integrated Prudential Sourcebook heading) on the FSA’s website for a precise statement of which aspect of the CP128 rules and guidance are to be brought into force.

http://www.fsa.gov.uk/Pages/Library/Communication/Speeches/2004/SP201.shtml 

Pension Plan Sponsors Changing Investment Focus, Watson Wyatt Finds

New Pension Laws Spark Move to Long-Term Investment Strategies

WASHINGTON, November 1, 2006 – As companies react to the Pension Protection Act and new accounting rules, they will likely consider investment approaches that better hedge their long-term pension liabilities, according to experts at Watson Wyatt Investment Consulting, a leading global consulting firm.

“With the recently enacted pension reform law and new accounting rules, plan sponsors are shifting risk strategies,” said Mark Ruloff, director of asset allocation at Watson Wyatt. “Higher funding targets, restrictions on smoothing and requirements for valuing pension assets and liabilities at a market basis are prompting companies to look for more predictable returns through liability-driven investing.”

According to Ruloff, Watson Wyatt has recommended the use of liability-driven strategies in more than 90 percent of its asset allocation work for U.S. companies conducted in the past year.  Watson Wyatt’s asset allocation methodology makes extensive use of liability-driven investment concepts to achieve funding status predictability in the post-reform environment.  These concepts include decreasing public equity investment in favor of fixed income and alternatives and enhancing alpha opportunities (performance that exceeds benchmarks).

The move is part of a global trend to more closely match pension investments with plan liabilities, instead of focusing solely on the amount of assets in the plan.  In the United Kingdom, for instance, Watson Wyatt has been an adviser on nearly 70 over-the-counter derivative and related executions for Sterling-based institutions, with a total nominal exposure of approximately £32 billion.

“A greater emphasis on liability-driven investing will help U.S. companies get ahead of the curve by providing plan sponsors with enhanced protection and performance over the long term,” said Carl Hess, director of Watson Wyatt’s investment consulting in North America. “That can only help the overall health of the defined benefit system.”

About Watson Wyatt Investment Consulting

Watson Wyatt Investment Consulting, a division of Watson Wyatt, is focused on creating financial value for institutional investors through independent, best-in-class investment advice. The firm provides coordinated investment strategy advice based on expertise in risk assessment, strategic asset allocation, and investment manager selection to some of the world’s largest pension funds and institutional investors. It has more than 300 associates in Europe, the Americas and Asia. In the United States, investment advisory and investment consulting services are provided by Watson Wyatt Investment Consulting, Inc., which is a subsidiary of Watson Wyatt Worldwide, Inc. Watson Wyatt Investment Consulting, Inc., is a registered investment adviser with the Securities and Exchange Commission.

About Watson Wyatt Worldwide

Watson Wyatt (NYSE: WW) is the trusted business partner to the world’s leading organizations on people and financial issues.  The firm’s global services include: managing the cost and effectiveness of employee benefit programs; developing attraction, retention and reward strategies; advising pension plan sponsors and other institutions on optimal investment strategies; providing strategic and financial advice to insurance and financial services companies; and delivering related technology, outsourcing and data services.  Watson Wyatt has 6,000 associates in 30 countries and is located on the Web at www.watsonwyatt.com.

Contact

Ed Emerman, 609/452-5967, eemerman@eaglepr.com
Emily Rieger, 703/258-7634, emily.rieger@watsonwyatt.com

http://www.watsonwyatt.com/news/press.asp?ID=16678 

 

DB schemes move towards risk-sharing approach

Thursday 26th April 2007: 10:00

By Nyree Stewart

At least one large company with a defined benefit scheme is considering reopening the pension but on a risk-sharing basis, claims the Pensions Regulator.

Speaking at the launch of its governance discussion paper, June Mulroy, executive director of delivery at the Pensions Regulator, suggested there are some interesting products coming through the market aimed at large final salary FTSE 100 companies, but the problem to address is how to offer less expensive ‘scaled down’ versions.

She says it is ‘heartening’ many employers want to keep their DB schemes open, although not necessarily on the same terms, so has been keeping a watching brief at solutions emerging from the City.

Mulroy adds: “We know of one company considering reopening its DB scheme as a risk-sharing proposition, as they feel they have a product which can manage these risks, and although at the early stage we were initially sceptical, it seems to have legs, and we can see other companies beginning to look at this approach.”

However, while some employers do approach the Regulator about proposed schemes, Mulroy says it doesn’t ‘approve’ or ‘kite mark’ schemes, although it does highlight which aspects it really doesn’t like.

She says: “There are some ideas we have seen which are simply abandonment – hence our guidance last year – however we are beginning to see less of these although the solutions currently available are focused on the large FTSE 100 companies, but they are more regulated.”

Mulroy says she doesn’t believe any solutions will really emerge until the end of 2007, as she says they would require “fundamental changes” which cannot “happen overnight” as firms have to find the funds to make any new solutions viable.

She also warns the Regulator does not want to become a ‘tick-box’ regulator as the aim is to get away from the compliance-based regime and move towards a more risk-based approach.

She points out the problems with a ‘tick-based’ approach is it could lead to a ‘one-size fits all’ approach of pension fund regulation, whereas the Pensions Regulator wants to ‘educate and enable’ rather than resort to enforcement.

She says, for example, in clearance procedures for mergers and acquisitions, firms do not actually need to apply for clearance or can ignore and recommendation TPR make, businesses might be risking the prospect of its powers being used at a later date.

She admits the Regulator does occasionally grant retrospective clearance on M&A issues, and although she says it “doesn’t like doing it” and believes it “isn’t the ideal”, she admits they will consider it to help provide a clearer picture for trustees.

Mulroy adds: “Enforcement is used as a last resort, we’re not afraid to use them, as we recently used one of our strongest powers [to ban a trustee for life], but it is an awfully large weapon to hit people with, particularly when it will only send a message to the people you hit.”

As a result, she says: “Education is our main issue as we don’t want to add to the burden of schemes. The Trustee Toolkit is the first step but we want to push it much more as there is a strong correlation between education and trustees understanding trickier issues such as employer covenants.”

If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7034 2681 or email nyree.stewart@incisivemedia.com.

This article was first published by IFAonline, part of the Incisive Media group.

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New-look

Citadel spreads its wings

Renée Schultes

26 Apr 2007

Citadel is looking less and less like its original self. Founded in 1990 as a convertible arbitrage hedge fund, the group is also an options marketmaker, a hedge fund administrator and its latest venture is a fund of hedge funds business that will also seed new managers.

The Chicago-based group has set up Citadel Alternative Asset Management as a separate subsidiary.

Running a fund of hedge funds alongside Citadel’s $13bn (€9.5bn) in proprietary funds was not an option because of conflicts of interest. The new unit will provide commercial diversification from its in-house funds.

To start the new business, Citadel’s partners have invested about $500m, according to sources.

It hired Jon Venetos, who ran Deutsche Asset Management’s fund of hedge fund business in New York at the beginning of this year. Venetos will also be working on launching the incubator funds business.

He joined Deutsche’s absolute return strategies group in 2003 from Merrill Lynch Investment Managers and will be building a team of analysts.

Citadel joins a growing number of fund of hedge funds that have gone into the incubation business. Blackstone launched its effort last November under Gideon Berger in London and FRM is setting up a unit. Citadel has hired Matt Wilson as head of sales and marketing for Citadel Solutions, the new administration business, and Citadel Alternative Asset Management this month. He joined from Bank of America, where he was global head of prime brokerage sales.

This latest move suggests Citadel, which became the first hedge fund to issue bonds in the public market last December, is looking at greater expansion.

Citadel declined to comment on whether private equity style investing, which is an area several established hedge funds have engaged in recently, could also prove tempting.

Credit rating agency Moody’s said last week it would be difficult for it to award investment grade ratings to hedge fund debt.

Citadel issued $500m in bonds last December and Moody’s expects more deals to come. Raising capital in this way is attractive to hedge funds as it reduces their dependence on prime brokers, whose capital can be more quickly withdrawn.

http://www.financialnews-us.com/?page=ushome&contentid=2447636847