The Securities and Exchange Commission is gearing up to take the hedge fund industry "under its wing," in an effort to regulate the $1 trillion industry and give investors the confidence of knowing that there's a regulator on the beat.
"We don't want people in the hedge fund industry to feel there is no one looking over their shoulders, said Walter Ricciardi, in an Aug. 18 report from Reuters.
By the beginning of next year, the loosely regulated investment pools will be expected to submit to audits, adhere to a best practices business code, and hire officers to make certain that hedge funds follow the rules.
The heightened scrutiny by SEC is due to the huge increase money that has been flowing into hedge funds.
Although the SEC has not gained oversight of the hedge funds themselves, they have gotten authority over their investment advisors. That's an important point, because investment advisors manage the hedge fund portfolios.
The SEC is currently getting its staff up to speed on the still relatively immature hedge fund industry and how to enforce the new rules it has installed.
"We are training people to understand what hedge funds are," Ricciardi said. "One key way to do the job well is to understand industry issues.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.