Wednesday, November 10, 2004
More on SEC Hedge Fund RIA Requirement
November 10: Market Risk - Hedge Funds Shouldn't Wait to Comply with New SEC Rules
Location: New YorkAuthor: Ellen J. SilvermanDate: Wednesday, November 10, 2004
Hedge fund advisors will have to prepare for a new era of regulation that will alter the way they do business, said regulatory experts in a web seminar recently held by the SEI Knowledge Partnership. SEI Investments is a leading global provider of asset management and investment technology solutions.
On October 26th, theSEC adopted a rule requiring nearly all hedge fund advisors to register with the SEC and comply with most regulations that pertain to other registered investment advisors. The rule is to be effective February 1, 2006. Although industry groups reportedly are already preparing to challenge the SEC rule in court, the SEI panelists said they believe the hedge fund industry will be unable to maintain the regulatory status quo. Not only has SEC Chairman William Donaldson made more stringent hedge fund regulation a top priority, investors are also indirectly pushing hedge fund advisors toward SEC registration. A survey of SEI's 87 hedge fund advisor clients found that just over half are currently SEC-registered.
The seminar discussed a variety of ways new regulation will not only affect day-to-day hedge fund operations, but demand a "new mindset." Under new rules, hedge fund advisors will need to: keep detailed written records of all actions and fully document all performance claims going forward; be alert to heightened scrutiny of conflicts and their disclosure; determine the allocation of trades in advance; adhere strictly to deadlines for personal trade reports; delay in pursuing new strategies until all possible compliance implications are analyzed and addressed; and be prepared for frequent, surprise SEC inspections, and for tough enforcement actions if problems aren't resolved.
"These are major changes that may make hedge funds feel slower and less competitive," said Jim Volk, Chief Accounting Officer and Chief Compliance Officer for SEI Investments' Fund Accounting and Administration business. "But remember, other advisors have been subject to registration requirements for years, and nearly all hedge fund advisors will be subject to the new rule."
Article Printed From RiskCenter.com
Location: New YorkAuthor: Ellen J. SilvermanDate: Wednesday, November 10, 2004
Hedge fund advisors will have to prepare for a new era of regulation that will alter the way they do business, said regulatory experts in a web seminar recently held by the SEI Knowledge Partnership. SEI Investments is a leading global provider of asset management and investment technology solutions.
On October 26th, theSEC adopted a rule requiring nearly all hedge fund advisors to register with the SEC and comply with most regulations that pertain to other registered investment advisors. The rule is to be effective February 1, 2006. Although industry groups reportedly are already preparing to challenge the SEC rule in court, the SEI panelists said they believe the hedge fund industry will be unable to maintain the regulatory status quo. Not only has SEC Chairman William Donaldson made more stringent hedge fund regulation a top priority, investors are also indirectly pushing hedge fund advisors toward SEC registration. A survey of SEI's 87 hedge fund advisor clients found that just over half are currently SEC-registered.
The seminar discussed a variety of ways new regulation will not only affect day-to-day hedge fund operations, but demand a "new mindset." Under new rules, hedge fund advisors will need to: keep detailed written records of all actions and fully document all performance claims going forward; be alert to heightened scrutiny of conflicts and their disclosure; determine the allocation of trades in advance; adhere strictly to deadlines for personal trade reports; delay in pursuing new strategies until all possible compliance implications are analyzed and addressed; and be prepared for frequent, surprise SEC inspections, and for tough enforcement actions if problems aren't resolved.
"These are major changes that may make hedge funds feel slower and less competitive," said Jim Volk, Chief Accounting Officer and Chief Compliance Officer for SEI Investments' Fund Accounting and Administration business. "But remember, other advisors have been subject to registration requirements for years, and nearly all hedge fund advisors will be subject to the new rule."
Article Printed From RiskCenter.com
# posted by Tom @ 7:21 AM 
