Author Archives: Jordan

About Jordan

Jordan is a Partner and Vice President at HedgeOp Compliance, LLC. He is in charge of the development, growth and marketing of HedgeOp's ComplianceTrak software. Prior to joining HedgeOp in March of 2003, Jordan worked at Euromoney Institutional Investor, Plc., as a Client Services Executive. While there, he worked with senior level executives in the New York and Canadian banking communities to plan and coordinate financial and legal training seminars. Jordan graduated with a B.S. in Applied Economics Management from Cornell University.

NY Hedge Funds: Look Out

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According to Reuters today, the SEC is planning on beefing up its New York office staff by about 8% this year, partly to focus more efforts on regulating the NY hedge fund industry:

The agency plans to hire 18 people on the enforcement side, where it currently employs about 150 people in New York, and add 15 people to its examinations staff, which currently numbers about 210 in New York, Mr. Canellos said at the Reuters Private Equity and Hedge Funds Summit in New York.

The push to hire more lawyers, accountants and even former traders comes at a time that the agency is seeking to become more aggressive in going after the bad guys on Wall Street.

This comes on the heels of comments made by Bruce Karpati, the co-chief of the SEC’s asset management unit, pushing for hedge fund registration.   Mr. Karpati is hoping for more disclosures by hedge fund managers and stated at a recent conference:

“When you have more (hedge fund advisers) that are registered, we will have more access to information,”

As congress makes slow progress on its regulatory reform bill, the SEC is clearly gearing up for the expected registration of hedge fund managers.

HF Regulation Coming to Connecticut?

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According to the Associated Press, lawmakers in Connecticut, may be gearing up to pass hedge fund legislation in their state.  Last year, the state legislature failed to pass a bill which would have required hedge funds and private equity firms to disclose certain conflicts of interest.  Some state lawmakers are looking to use that bill as a starting point for new hedge fund legislation.

Hedge fund regulation on the federal seems to be stuck in the Senate right now.  Although the house has already passed their financial reform bill (which includes hedge fund registration), the Senate version seems to be stuck.  It looks like some Connecticut legislators have gotten fed up with the slow progress and may take their own steps towards regulation for hedge funds in the state.

Seminar Alert: Conducting an Annual Compliance Review

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HedgeOp Compliance, LLC will be holding a free webinar on March 24th on: “Conducting an Annual Compliance Review.”

This seminar will look at HedgeOp’s suggested method for conducting an annual review including: review of compliance inventory items, conflicts of interest of review, use of employee and service provider questionnaires and more.  Please note that this seminar is not only geared towards SEC-registered managers, but also unregistered managers looking to conduct an annual compliance review as a form of “best practice.”

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

Compliance Reminder: ADV Part 1 Updates

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For all of the SEC registered investment advisers out there, don’t forget that your annual ADV Part 1 update filing is due at the end of march (90 days after fiscal year end).  Update filings are made via the IARD system and AUM-based filing fees will be required this year.

While you’re thinking about Form ADV’s, don’t forget that some states require that you submit a copy of your ADV Part II to them (if you have made a notice filing in that state).  For example, New York State requires that advisers who have made notice filings to the state must submit a copy of their ADV Part II to the NYS Dept. of Law.  An updated copy of Part II must also be offered to your investors and advisory clients once a year.

FINRA: Firms Must Monitor Social Networking Sites

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Touching on a subject that we discussed back in August, FINRA has issued an advisory note stating that brokers must monitor their employees’ activity on social networking sites.  According to the Bloomberg article:

Firms that archive client communications including e-mails need to adopt similar policies for social networking sites and may use software to automatically log brokers’ Web messages…

With the proliferation of social networking sites and the privacy restrictions that most users utilize, it is difficult to imagine how brokers can possibly hope to monitor or record their employees activities on those sites.  The best they can hope for is to issue policies prohibiting the use of social networking sites for business.  As discussed in our earlier article on the subject, this is eventually going to become an issue for hedge funds and RIA’s as well.  Will the SEC eventually issue similar guidance?

Webinar: Reg S-P- Keeping Client Data Secure

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Reg S-P has been mentioned quite frequently on this site. In March 2008, the SEC released a set of proposed amendments to Regulation S-P which seek to require registered investment advisers to enhance the protection of consumer financial information. If adopted, the proposed amendments would require advisers to expand existing safeguards into a more expansive “information security program”.

HedgeOp Compliance CEO, Bill Mulligan conducted a webinar on these proposed changes, specifically focusing on: helping investment adviser’s understand the expanded requirements under the proposal and discussing the hot button topics such as: (i) the identification of reasonably foreseeable risks at your firm; (ii) designing information safeguards to control/manage the identified risks; (iii) setting up a plan for testing and training for staff; (iv) evaluating the programs of your service providers; and (v) developing and reviewing your procedures related to unauthorized access of confidential data.

You can view a video recording of this webinar and download the presentation materials below.

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Download webinar presentation

CFTC Amendments Go Into Effect

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A few weeks ago, the Commodity Futures Trading Commission (“CFTC”) issued amendments to regulations covering periodic account statements and annual reports that Commodity Pool Operators (“CPOs”) need to prepare and distribute for the commodity pools the CPOs operate. Several of the amendments will impact the reporting that is presently prepared and distributed by CPOs that operate pools in accordance with CFTC Regulation 4.7 (“4.7 Pools”). Furthermore, one of the amendments impacts the annual reports prepared and distributed by those claiming exemptions from registration in accordance with CFTC Regulations 4.13(a)(3) or 4.13(a)(4). These amendments will become effective today and changes that affect annual financial reports will apply to annual reports distributed for fiscal years ending December 31, 2009 and later.

This post only summarizes the amendment provisions. You can view the final rule release here. Continue reading →

Insider Trading Probes Expand

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The SEC is clearly continuing their interest in insider trading as they have reportedly sent dozens of subpoenas to hedge fund managers and brokers.  From FINalternatives:

The regulator has sent at least three dozen such subpoenas to hedge funds and brokerages, The Wall Street Journal reports. According to the newspaper, at least some of the managers receiving the subpoenas were surprised by their scope and is causing fear that the SEC may come down hard on what have become common practices in the industry.