September 22, 2006
SEC At It Again, Tightens Hedge Fund Scrutiny
This was bound to happen. I mean, how could you expect the Securities and Exchange Commission to sit back and watch as hedge funds collapse in on themselves? The SEC is now tightening scrutiny of hedge funds by stepping up examination of the links between hedge funds and broker-dealers, particularly where they are owned by a hedge fund. The SEC has been trying for quite some time now to bring hedge funds under the regulation umbrella and until now, its efforts haven’t been particularly fruitful. In June, a US federal court overturned an SEC rule forcing hedge fund advisers to register with the agency.
The SEC's office of compliance already conducts routine inspection of broker-dealers. The enforcement division, which is focused on alleged wrongdoing in the securities markets, will only step up focus on hedge funds. Msnbc.msn.com reports:
The timing of the fresh scrutiny comes as Amaranth Advisors, a hedge-fund manager that lost about $4.6bn in the past month, has become the second largest hedge fund loss since LTCM.
Read more: SEC tightens hedge fund scrutiny
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