Azentus Capital, expected to be among the largest hedge fund launches of the year, has recruited a trio of brand-name prime brokers to handle its trades.

The Hong Kong-based hedge fund, founded by former Goldman Sachs proprietary-trading chief Morgan Sze, will use the services of his old firm, as well as those of Morgan Stanley and UBS, Reuters reports. The new fund is expected to debut in the second quarter with more than US$1 billion in initial assets.

Sze, who has been planning the fund since last year after Goldman decided to pull the plug on its prop. trading operations, officially left the firm earlier this month and registered Azentus with Hong Kong regulators a week ago. He is thought to be building a team of about 30 for the firm, including Roger Denby-Jones, former Boyer Allan Investment Management CEO, as chief operating officer, and at least four former members of his team at Goldman.

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A Texas hedge fund manager was quite the storyteller, the Securities and Exchange Commission has alleged.

The regulator said that Christopher Blackwell misappropriated more than $1.2 million of the $4 million he raised, spending large sums on himself—including covering his child support payments and funding his fancy for “gentlemen’s clubs”—and some $500,000 on Ponzi scheme payments. More money went out in the form of payments to both himself and his associates.

A court has frozen Blackwell’s assets, HedgeFund.net reports. The SEC was led to his alleged scam by the Department of Homeland Security, which became concerned by large wire transfers made by Blackwell.

A DHS agent then met with Blackwell in the guise of a potential investor, and the lies continued, according to the SEC. Blackwell allegedly claimed, during a confab at a local Hooters restaurant, that he had studied at the University of Madrid and worked for the Bank of Madrid and Goldman Sachs. None of those claims are true, according to the regulator.

Blackwell allegedly told his victims, including an unidentified former member of the Dallas Cowboys football team, that his hedge fund invested in fixed-income, hedge funds and movie distribution deals.

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Asian fund launches were up 48% year on year in 2010, with 95 new funds attracting $3.84 billion in assets, according to the latest AsiaHedge New Funds Survey.

In 2009, 78 Asian funds were launched with a total of $2.6 billion.

“Despite a slightly lackluster second half, new Asian hedge fund launches continued to see a sustained interest, though rising barriers to entry meant that most of the capital went to either second-generation managers with a strong pedigree or new offerings from established hedge fund shops,” says Aradhna Dayal, editor of AsiaHedge in Hong Kong.

“Anecdotal evidence suggests that U.S. allocators were probably the largest contributors to the start-up capital last year, though a new breed of Asian high net worth individuals and family offices also emerged as silent but serious backers of several new hedge funds.”

Singapore performed well in 2010, reporting the launch of 15 new funds with $673 million, up significantly from 2009. “The new regulatory regime being rolled out there has brought about a renewed confidence in the Lion City funds, and that is being reflected in the start-up space too,” says Dayal. Hong Kong remained the leader in the region, though, with 57 launches that attracted $2.4 billion in assets.

Redistribution of assets, resulting from the outflows from closures to new managers, as well portfolio rebalancing by investors within Asia, contributed significantly to the total new launch asset raising.

In terms of strategy, new China funds led the pack, as they did in 2009, attracted $817 million or 21% of total assets gathered by new funds. Multi-strategy funds, with $365 million; Japan-focused funds, with $317 million; and macro funds, with $208 million, also attracted considerable interest.

Dayal says 2011 holds promise, with several high-profile bank spin-offs and second-generation hedge fund launches in the offing. “Just like the class of 2009, the class of 2011 will be an interesting one to watch, with star prop traders such as Morgan Sze, Ben Fuchs and Charlie Chan expected to make their debuts,” she says.

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Mutual fund giant Pacific Investment Management Co. has hired a former executive of Citadel Investment Group’s investment banking unit to lead its analytics effort.

Ravi Mattu will start as a managing director at the California firm next month, PIMCo said, reporting directly to CEO Mohamed El-Erian. Most recently, Mattu was head of research and strategy at Citadel Securities, leaving in July. Mattu is just one of a long series of high-level executives to leave the group in recent years.

“Ravi’s mandate is to expand our state-of-the-art analytics solutions for PIMCO’s clients,” El-Erian and Bill Gross, the firm’s co-chief investment officers, said. “Having a word-class integrated analytics framework has been key to PIMCo’s success, and remains so.”

Mattu, who will be based at PIMCo’s Newport Beach headquarters, takes over for William de Leon, global head of portfolio risk management, who currently leads the analytics group on an interim basis.

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In the wake of their failed deal to be acquired by hedge fund Icahn Enterprises, the top managers of energy company Dynegy have resigned.

Bruce Williamson, the company’s chairman and CEO, and Holli Nichols, its CFO, will resign on March 11, they said yesterday. The departures follow the resounding rejection of Icahn’s $665 million bid for Dynegy, which attracted the support of less than 5% of shares outstanding.

Icahn’s bid for Dynegy has expired, although the hedge fund could have continued extending it until September. The firm, which had previously helped short-circuit a deal for Dynegy by the Blackstone Group alongside hedge fund Seneca Capital, found its own bid sunk by Seneca’s strenuous opposition.

Dynegy said a further shakeup is likely, with some members of its board likely to leave at its annual meeting.

“While all current directors intend to remain fully engaged in their duties through the 2011 Dynegy annual meeting, we expect the new members of the board to take the lead in defining the future composition of the board and in selecting a new chief executive officer,” newly-named interim Chairman Patricia Hammick said.

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CalPERS has lost its third portfolio manager in a month—the fund’s senior real estate portfolio manager, James G. Lasher, has resigned.

Lasher’s resignation follows those of two senior portfolio managers in the California Public Employees’ Retirement System’s $47.5 billion alternative investment program—Joncarlo Mark and Michael Dutton.

Clark McKinley, spokesman for the $226.5 billion system, confirmed the latest departure for Pensions&Investments and said it was effective Friday.

Lasher had been with CalPERS for two years and managed investments in 20 residential investment funds.

McKinley told P&I the housing portfolio will play a less important role as the California retirement system winds down non-core investments as part of its new real estate strategy.

P&I quotes unidentified sources as saying Lasher was upset by the growing influence of consultants over the direction of CalPERS’ real estate portfolio.

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Andrew Cuomo

Henry Morris, the man at the center of New York’s pay-to-play pension scandal, was sentenced to between 16 months and four years in prison yesterday.

Morris, who pleaded guilty to corruption charges in March, was sent straight to jail by New York State Justice Lewis Stone. Stone called Morris’ scheme of taking kickbacks from investment advisers, including hedge funds, in exchange for allocations from the New York State Common Retirement Fund, “evil.”

“My actions diminished the integrity of New York State’s government,” Morris said at his sentencing. “Most importantly, they caused ordinary people to question their faith in the political system.”

The case against Morris was led by former New York Attorney General Andrew Cuomo, now the state’s governor. His successor, Eric Schneiderman, said, “today’s sentencing decision by the court sends a strong message to New Yorkers that those who abuse positions of power to line their own pockets will be held accountable by this office.”

Morris was the top political consultant under former state Comptroller Alan Hevesi, who resigned after an unrelated scandal and last year pleaded guilty to corruption charges himself. Among the alternative investments firms caught up in the scandal were the Carlyle Group and Riverstone Holdings.

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Hedge Fund Alert reports today that five portfolio managers will leave Shumway Capital to start their own funds. They are: Neil Shah, who specializes in healthcare stocks; Ashwin Vasan, a macro manager; Chris Lange, a consumer-stock specialist; Jeff Nykun, who specializes business services companies; and Shumway Capital CIO Tom Wilcox.

Wilcox, who is credited with the call to short financial stocks that made a killing for the fund in 2008, had been Shumway’s heir apparent. But after the announcement that he would be taking over the reins from the founder triggered billions in redemptions, Shumway was forced into damage control mode, promising major investors he’d postpone the handover for three months. Then, abruptly, on February 4th, he announced he would return all investor capital.

Shumway launched Shumway Capital in 2002, after a successful career at Julian Robertson’s Tiger Management. Starting with five employees and $70 million in capital, Shumway grew the firm to $8 billion and 95 employees. Over its eight-year run, the fund provided average annual returns of 17%.

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Brian Kim

New York hedge fund manager and sometime TV pundit Brian Kim has been accused of masterminding a $4 million Ponzi scheme.

Manhattan DA Cyrus Vance said Tuesday Kim, who remains at large, had been indicted on charges of grand larceny and scheme to defraud for a scam that started in 2003. Kim is accused of defrauding 45 West Coast investors, according to the New York Daily News. Kim is said to have preyed on tech workers in Silicon Valley and Washington.

“The defendant induced his clients to make risky and speculative investments by portraying himself as an accomplished trader and money manager,” Vance said.

The 35-year-old made two appearances on CNBC’s financial news show “Squawk Box” in 2009, during which he is alleged to have promoted his fraudulent investment business. Officials claim he also doctored financial statements and told investors he’d generated returns of 240% since 2000.

Kim also faces a civil suit, filed Tuesday by federal regulators, which claims he stole at least $2.1 million from 37 investors in 2009 and 2010.

Officials say Kim has been AWOL since January, when he failed to show up for a Manhattan trial on a separate charge (he is alleged to have stolen $438,000 in 2008 from the East Village condo where he lived).

Kim, if convicted, could face up to 25 years in prison.

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Things aren’t as rosy at Diamondback Capital Management as the hedge fund indicated last week.

Investors have filed redemption notices totaling more than $1 billion with the firm, one of four raided in November by the Federal Bureau of Investigation as part of the Justice Department’s massive insider-trading probe. Diamondback has not been accused of any wrongdoing.

The withdrawal requests, first reported by The New York Times, are about twice the amount the firm reported to investors last week, indicating that its efforts to reassure did not go as well as Greenwich, Conn.-based Diamondback had hoped. Later last week, the firm acknowledged that redemption notices had crested $700 million; the final total is likely to be higher, as the deadline for notices was yesterday at 5 p.m.

Diamondback, which manages about $5.5 billion, had told investors last week that “several large investors” would stick with the firm. That includes that Blackstone Group, the hedge fund’s largest investor, which does not plan to substantially alter its investment with Diamondback.

The hedge fund also warned investors to think long and hard about their decision: Unlike most of its peers, Diamondback said it will not allow investors to revoke their redemption requests. It is unclear if the ballooning level of withdrawal demands will lead it to change that stance.

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