Compliance Avenue

With an apparent push by U.S. Congress to enact Hedge Fund Registration Law by year end, hedge fund managers that were against previous registration proposals may be able to rest a bit easier.  It seems that the hedge fund lobby, anchored by the Managed Fund Association, is making its presence felt on Capitol Hill.  With the appointment of Richard Baker, a former chairman of a subcommittee of the House Financial Services Committee, as the MFA head, it seems the political ties have reaped some rewards.  As the NY Times points out:

“the proposals for hedge funds laid out by the Obama administration, as part of its overhaul of financial regulation, are strikingly similar to those that hedge fund lobbyists said they would accept.”

So with an uptick of political contributions from hedge funds (and their professionals) and the increased political exposure, the ultimate question is:  Will these efforts soften the regulatory blow on the industry?  Only time will tell…

On Wednesday, September 23, 2009, Treasury Secretary Geithner spoke before the House Financial Services Committee (the “Committee”), which recently opened hearings on the administration’s sweeping overhaul of the financial system. Geithner’s testimony speaks of a renewed commitment on the part of the Obama administration and key members of Congress to enact legislation before year-end.  Read the rest of this entry »

HedgeWorld recently reported that Global market regulators have published new rules spelling out how small investors putting money into funds of hedge funds should be protected.

The International Organisation of Securities Commissions (IOSCO) published its final set of standards on best practice for funds of hedge funds investing.

Fund of hedge funds’ managers will have to make sure there is enough liquidity to meet redemptions. Managers should also set up proper due diligence procedures before making investments and ensure the fund has properly trained staff to do so.

What steps have you taken as a manager to make sure you have proper due diligence procedures in place?

Let us know in the comments…

Richard Wilson at the Hedge Fund Blogger links to an article discussing a shift in the make-up of hedge fund investors towards becoming more institutional.   According to Global Pensions, almost 60% of hedge fund assets are owned by institutions.

Naturally, this should affect how hedge fund managers think about compliance as institutional investors are much more likely to demand that their managers have a strong culture of compliance and solid compliance infrastructure in place.   This trend will also likely lead many unregistered hedge fund managers to think about registration (even before the much-anticipated requirements are passed).

Are you a hedge fund managers seeing a shift in your client base?  Let us know in the comments.

HedgeOp Compliance, LLC will be holding a free webinar on September 30th on: “Staying Prepared for an SEC Audit and Building a Culture of Compliance.”

This seminar focuses on identifying the areas of your business that are likely to be scrutinized during an SEC examination and provide guidance on how you can stay prepared for an SEC audit. In addition, we will offer practical advice on how your firm can build a compliance program that will clearly demonstrate your firm commitment to building and maintaining a “culture of compliance.”

You can view more information and register for the event here.

SEC Chairman Mary Schapiro and UK FSA Chief Executive Hector Sants today announced plans to explore common approaches to reporting and other regulatory requirements for key market participants such as hedge funds and their advisers. In particular, they agreed to identify a common, coherent set of data to collect from hedge fund advisers/managers to help the SEC and FSA identify risks to their regulatory objectives and mandates.

Read the rest of this entry »

Read the rest of this entry »

From time to time we have industry experts come on board to guest blog in order to provide our readers with interesting and insightful commentary.  Today we have Kevin Phillip and Wade Kenny of DMS Management discussing the implications of SEC audits to offshore fund managers.

It has long been a fact of life for registered investment advisers – preparing for, and surviving, the SEC examination. While, understandably, no organization looks forward to such an examination, its importance remains.  With proposed amendments from the SEC, it may become an even more frequent fact of life for the investment adviser.  Though few would argue that this is not in the best interest of investors, or the industry in general, the implications of these examinations raise some interesting questions for the offshore hedge fund and its service providers. Read the rest of this entry »

As many of you may know, former SEC Chairman Christopher Cox contacted the SEC’s Office of Inspector General (OIG) on or about December 16, 2008 requesting that the Office undertake a full investigation into: (i) the allegations made to the SEC regarding Bernard Madoff going back to at least 1999, (ii) the SEC’s internal policies that govern when allegations of fraudulent activity should be brought to the Commission, and (iii) if SEC Staff contacts with the Madoff family and firm had any impact on the Staff’s decisions regarding the firm.  The results of the SEC’s Office of Inspector General’s extensive investigation were recently published in an over 450 page report.  This report goes into great detail of how the SEC failed on numerous occasions to uncover Bernard Madoff’s jaw dropping Ponzi scheme.  Read the rest of this entry »

Doug Cornelius and several guests will be live blogging the Senate Banking Committee’s Madoff hearing today.

UPDATE: For those who missed it, you can view a replay and read all the commentary on Doug’s site.