Author Archives: Jeff

About Jeff

Prior to joining the team in March of 2001, Jeff worked at The US Trust Co., Chase Manhattan Bank and The Dreyfus Funds in various capacities within the client services and Mutual Fund custody divisions. Jeff runs the day-to-day operations of the firm. He earned a B.A. degree in Banking and Finance from Hofstra University in New York in 1992.

SEC Probing of Side Pockets

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As reported in the Wall Street Journal , federal regulators are examining whether hedge-fund managers abused tools known as “side pockets” that helped prevent clients from withdrawing billions of dollars of assets during the financial crisis.  More specifically, the examinations are being conducted by the Enforcement Division’s new “Asset Management Unit”, which is headed by co-chiefs Rob Kaplan and Bruce Karpati, and which was created to cover, among other things, hedge funds, private equity funds and investment advisers.  The Asset Management Unit is apparently looking into the possibility of disclosure and valuation issues surrounding the use of side pockets during the financial crisis. Continue reading →

Regulatory Reform…….what is the SEC doing?

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As SEC chairman, Schapiro pledged to quickly pursue new limits on short selling. In April, just two months after she took the job, the agency unveiled a proposal to crack down on the practice.

But more than a year after Schapiro took office, the SEC has not yet written into the Wall Street rulebook the short-selling limits — or most of the other measures that the agency has proposed to more tightly regulate the financial system. According to the Washington Post, whether Schapiro can achieve more of her reform agenda will be a test of how much she can change the SEC, which gained a reputation as a weak Wall Street regulator in the years leading up to the financial crisis………

SEC continues investigation of CDO’s with info request from Paulson & Co.

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According to a report from the Financial Times, Paulson & Co, a hedge fund that made billions of dollars betting against subprime mortgages, has received a request for information from the Securities and Exchange Commission in connection with an investigation into complex securities at the heart of the financial crisis, according to people familiar with the matter. In the months prior to the real estate crash, which pre-empted the global economic volatility, the company made $15 billion from investments in subprime deals.

Loch Capital + S2 Capital Management + Galleon Group = More Insider Trading or just speculation??

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As discussed on Dealbreaker, reports say that Boston-based Loch Capital Management has been “hit hard” by redemptions since the friend, Steven Fortuna, of founders (and bros) Timothy and Todd McSweeney pleaded guilty to insider trading, and agreed to cooperate with the government. Reuters is reporting that neither brother has been implicated in the Galleon investigation, in the clubby world of Boston’s hedge fund community, speculation has been swirling around the firm.

SEC Gets New Inspections Chief

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The SEC has announced that Carlo V. di Florio has been named Director of the agency’s Office of Compliance Inspections and Examinations (OCIE). Di Florio was previously a partner in the Financial Services Regulatory Practice at PricewaterhouseCoopers where he “played a leading role in strengthening the corporate governance, risk management and regulatory compliance practice.”

He has also played a “leading role in numerous high-profile engagements where PricewaterhouseCoopers was retained to investigate corporate fraud, corruption, conflicts of interest and money laundering.”

Read More Here.

Summary of New Amendments to Custody Rule

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On December 16th, the SEC announced in a press release that they have approved certain amendments to the Advisers Act custody rule (Rule 206(4)-2). Amendments to this rule were originally proposed in May 2009. The final rule was released on December 20, 2009 and incorporates many of the amendments proposed in May, but also contains several modifications to the May 2009 proposal particularly with respect to the impact on advisers to pooled investment vehicles.

The Release actually makes a number of specific suggestions for additional compliance procedures that should be considered.

A few highlights of the final rule amendments include:

Continue reading →

SEC Enforcer Says Insider-Trading ‘Systemic,’ Expresses ‘Concern’ About Hedge Funds

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A recent article posted on FINalternatives advised that “Insider-trading may be widespread in the hedge fund industry, the head of enforcement for the Securities and Exchange Commission said.”

Robert Khuzami said his office’s recent crackdown on insider-trading, which has snared several hedge funds, including the Galleon Group, may be an indication that such activity is “systemic” among hedge funds. And he warned that anyone engaged in illicit trading on insider-tips “should be worried.” Continue reading →

Federal Regulators Issue Model Privacy Notice Form

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Eight federal regulatory agencies released a final model privacy notice form that will make it easier for consumers to understand how financial institutions collect and share information about consumers. Under the Gramm-Leach-Bliley Act, institutions must notify consumers of their information-sharing practices and inform consumers of their right to opt out of certain sharing practices. The form was developed by the Federal Reserve, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Federal Trade Commission, the National Credit Union Administration, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the Securities and Exchange Commission. A link to the SEC release can be found here.