May 05, 2006
Hedge funds beware: Big bro’s watching
Here is the latest update on the regulations imposed on hedge funds by the Securities and Exchange Commission (SEC). I recently wrote about how the SEC was getting serious with hedge funds. In February, the Commission asked most hedge funds to register as investment advisors. Now as a follow-up, the SEC is targeting funds that have weak internal controls for regulatory action.
As part of its new compliance regulations, the agency plans to conduct audits at least every three years. This will be especially for funds that meet their ‘high-risk’ criteria. In my opinion, while some amount of regulation is good, at the end of the day, market forces will make these funds become self regulatory. Of course, a little nudge from the authorities never did any harm. Latimes.com reports:
Factors related to a fund's "internal control environment" are at the center of what constitutes high risk, said Elizabeth Jacobs, deputy director of the SEC's Office of International Affairs.
Read more: Regulators to Scrutinize 'High-Risk' Funds
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