Hedge fund managers that plan to register with the Securities and Exchange Commission should first make sure that they fit the new regulatory demands, or risk public humiliation, says SEI Investments.

The Oaks, Pa.-based outsourcing firm has offered 10 critical policy and procedure issues that hedge fund managers should examine prior to complying with regulator's new registration rule. Those include identifying potential conflicts of interest, trade allocation practices, handling of trading errors, "side letter" provisions that give preferential treatment to certain clients, third-party marketing, personal trading by advisor personnel, valuation practices, advisor performance advertising, proxy voting procedures, and lastly, e-mail retention.

SEI, however, encourages all hedge fund managers to register.

"If you are going after institutional money, clients will expect you to be registered," said Steven B. Nadel, a partner at the law firm of Seward & Kissel, in a statement announcing the Top 10 list. "And even if you are exempt for some reason, like having a two-year lockup, they will still expect to see policies that satisfactorily address every significant issue."

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