Hedge Fund Regulation Redux
In the aftermath of losses incurred by several Connecticut-based hedge funds and a recent court case that no longer requires hedge funds to register with the U.S. SEC, Attorney General Richard Blumenthal has convened a state-level Hedge Fund Task Force. Fortune writer Ellen Florian Kratz quotes Blumenthal as saying: "The facts about mammoth losses by Amaranth offer additional powerful and compelling evidence about the need to reform disclosure and oversight requirements [for hedge funds]."
According to a Reuters release on September 27, 2006, the U.S. House of Representatives has now passed a bill that mandates a federal study of hedge funds. "The bill, written by Delaware Republican Rep. Michael Castle, would require a wide-ranging study of hedge funds, their risks and regulation by the President's Working Group on Financial Markets, a multi-agency committee."
These two regulatory initiatives come around the same time that a new study augurs favorably for significant growth in the hedge fund industry. Just released by the Bank of New York and consulting firm Casey, Quirk & Associates LLC, the study concludes that "by 2010 institutions investing in hedge funds will increase to nearly 25% of all institutions, up from 15% today, representing a more than 60% increase. Retirement plans globally will account for the vast majority of asset flows, with corporate and public pension plans in the United States accounting for the largest percentage increase overall."
As with any investment, procedural prudence is paramount before committing funds. In the case of those hedge funds that purchase and sell complex securities that trade in thin markets, decision-makers absolutely must ask tough questions about risk management and valuation. Moreover, they need to feel comfortable with answers provided and understand how the oversight process changes over time and why.
If you are in the neighborhood, join us for a complimentary breakfast meeting on November 7 in midtown Manhattan from 8:30 to 9:30. Co-sponsored by valuation and risk company BVA, LLC, law firm Alston Bird LLP and ING Investment Management, we'll talk about hedge fund risk management and valuation issues that simply cannot be ignored by pension fiduciaries. Click here to have an invitation sent to you and/or to receive information about other upcoming events.
According to a Reuters release on September 27, 2006, the U.S. House of Representatives has now passed a bill that mandates a federal study of hedge funds. "The bill, written by Delaware Republican Rep. Michael Castle, would require a wide-ranging study of hedge funds, their risks and regulation by the President's Working Group on Financial Markets, a multi-agency committee."
These two regulatory initiatives come around the same time that a new study augurs favorably for significant growth in the hedge fund industry. Just released by the Bank of New York and consulting firm Casey, Quirk & Associates LLC, the study concludes that "by 2010 institutions investing in hedge funds will increase to nearly 25% of all institutions, up from 15% today, representing a more than 60% increase. Retirement plans globally will account for the vast majority of asset flows, with corporate and public pension plans in the United States accounting for the largest percentage increase overall."
As with any investment, procedural prudence is paramount before committing funds. In the case of those hedge funds that purchase and sell complex securities that trade in thin markets, decision-makers absolutely must ask tough questions about risk management and valuation. Moreover, they need to feel comfortable with answers provided and understand how the oversight process changes over time and why.
If you are in the neighborhood, join us for a complimentary breakfast meeting on November 7 in midtown Manhattan from 8:30 to 9:30. Co-sponsored by valuation and risk company BVA, LLC, law firm Alston Bird LLP and ING Investment Management, we'll talk about hedge fund risk management and valuation issues that simply cannot be ignored by pension fiduciaries. Click here to have an invitation sent to you and/or to receive information about other upcoming events.
