Compliance Avenue

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:

Read the rest of this entry »

A Connecticut hedge fund manager has pleaded guilty to lying to investors about the size of his funds and their performance.

More here:

Hedge Fund Manager Pleads Guilty In Conn.

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.” Read the rest of this entry »

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.

Human resources compliance is a necessity for any business in today’s legal environment. Between the Fair Labor Standards Act (FLSA), OSHA, sexual harassment, and antidiscrimination laws, a business that isn’t aware of its HR responsibilities is headed for trouble.

When done correctly, HR compliance is a process. It’s a way of defining proper individual and group behaviors, and assuring that laws and policies are understood and followed. This means you must know the laws and develop appropriate policies in relation to these laws. Compliance also means you and your managers need to communicate these policies to the troops, along with your expectations for adherence and the consequences for nonadherence. The latter requires specific investigative and punishment procedures.

Effective HR compliance programs need to be integrated into your business strategies and given more than just lip service. Compliance has to start at the top and trickle down to all levels, so everyone in the company knows that the workplace must be kept safe and discrimination won’t be tolerated.

These eight steps will help you achieve your compliance goals: 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…