Browsing: Hedge Fund Regulation

A recent paper by a scholar at Tilburg University and a market participant at Robeco outlines the difficulties that the hedge fund industry has faced over the last decade. These problems arose, at least in part, from the democratization of alternative investing. There are three important challenges to the hedgeRead More

A new paper by Marco Dell’Erba and Giovanni Patti takes a look at a recent crisis involving the stock of the Monte dei Paschi di Siena (MPS), as a way of studying the pragmatics of the European Regulation on short selling (SSR). Dell’Urba is affiliated with the New York UniversityRead More

The investment world now understands that politics and related matters of business climate in the Republic of India since the dramatic victory of the Bharatiya Janata Party in 2014. What is less well known is that alternative investment funds have been among the beneficiaries of the broader change. This storyRead More

At present, AIFMD allows for either a gross or a commitment method of measuring leverage. AIMA has suggested a third method. The Context The European Commission has issued a “call for evidence” on the EU regulatory framework for financial services. One of the comments the EC received on this subjectRead More

The Alternative Investment Management Association and S3 Partners jointly sponsored a new survey and report on the consequences of the Basel III reforms on the alternative-investment world. Basel III, a voluntary set of banking-supervisory standards for capital adequacy, stress testing, and market liquidity, published in its final form by theRead More

Paul Chadwick, chairman of AIMA Australia, says that the hedge fund industry in Australia is at an "inflection point." Faille reflects on that ubiquitous expression, and then turns to Australia's new Investment Manager Regime. Read More

Commissioner Gallagher contends that some recent enforcement actions "have unfairly contorted the rule to treat the compliance function as a new business line," thus giving compliance officers the unwelcome role of business heads. In this and other respects, Gallagher says the agency is setting up a perverse system of incentives for those who ought to be its allies, the CCOs of IAs. Read More

Guest columnist Shane Brett discusses a new RR Donnelley survey on the MMIF challenges facing fund administrators.Read More

This Lancelot's adventures came to a bad end: defeated by the dragon of insolvency. But its official liquidator did win a victory over an investor seeking special treatment via a side letter.Read More

Two rules within the CFTC rulebook that offer exemptions for certain CPOs from certain regulatory requirements mirrored the original pre-JOBS Act Reg D on the SEC side. But of course we are now in a post-JOBS Act world, and the CFTC staff has now acted, not through a rule change but by staff letter, to harmonize with its sister agency and with the JOBS Act mandate. Read More

Guest columnist Rick Ehrhart looks at hedge fund incentive compensation.Read More

In 1992 the Supreme Court ruled that the issuance of bonds is itself a commercial activity, thus bond defaults by sovereigns are clearly subject to litigation in U.S. courts. One of the more intuitive findings of the authors of a new empirical study of such lawsuits is that the identity of the characteristic plaintiffs has changed over time. Read More

Markets are bullish on the United States in particular, though this is so only with some obvious qualifications: they don’t expect that a go-go climate will return any time soon, but they do expect a slow-and-real recovery. Likewise, markets are modestly bullish on at least the north of Europe.Read More

A veteran of hedge funds and private equity, Jeff Joseph offers some comments to the U.S. Securities and Exchange Commission on the JOBS Act and what this legislation has the potential to mean to the global alternative investment community.Read More

The meat of the guide addresses what AIMA Canada considers sound practice in marketing and promotion, such as in the calculation and presentation of returns, in selecting a benchmark relevant to a specific strategy, and in explaining the various ratios used for the same purpose. It notes that the Association for Investment Management and Research’s Performance Presentation Standards (AIMR-PPS) recommend using a time-weighted method for the calculation of returns, a model otherwise known as the Modified Dietz method.Read More

By Ron S. Geffner, Partner, Head of Financial Services, Sadis & Goldberg LLP On April 5, 2012, President Obama signed the Jumpstart Our Business Startups Act, H.R. 3606 (“JOBS Act“). The JOBS Act requires the Securities & Exchange Commission (“SEC“) to revise existing rules to implement many of the provisionsRead More

"This industry will perhaps never really shake off the aura of secrecy and inevitable rumor mill, but investors and risk managers need to really start to judge funds on the metric against which the funds judge themselves: performance."Read More

Diane Harrison examines the state of the hedge fund industry and regulation.Read More

The Grant Thornton paper maintains that the asset management industry achieved "performance and operational efficiencies" during 2011, and this sounds like the sort of marginal adaptation that play a large part in Charles Darwins' writings, to which GT's Winstoin Wilson alluded. But ... the report also treats the regulatory environment as a meteor, capable of wiping out even the best-adapted of pre-collision dinosaurs. So "the Darwinian process" is an odd label for what it describes. Read More

Three lawyers with Covington & Burlington write about the new intensified scrutiny to which regulators are subjecting algorihtmic and high frequency trading. They place it in the context of an old dispute over what constitutes market manipulation. According to the broadest view, if a trader's 'sole intent' in making even a quite ordinary buy or sell order is to move the price, then the resulting trade is market manipulation.Read More

With the enactment of the Dodd-Frank Act (more formally the Wall Street Reform and Consumer Protection Act) in 2010, Congress demanded change. It did not specifically demand changes in the rules relating to CPOs, but it did demand that the SEC change certain rules regarding hedge fund advisors, and the CFTC has decided that a reconsideration of the CPO rules is “consistent with the tenor of the provisions” of that act because the “sources of risk delineated in the Dodd-Frank Act with respect to private funds are also presented by commodity pools.”Read More

Clearing within ten days after the transaction (T+10) was once the norm, though it now seems archaic. Clearing overnight or in a once-a-day cycle will in the years ahead become equally unsatisfactory. It may soon “become standard practice for risk managers and eventually traders to demand proof that their trades have been cleared mere seconds after execution.”Read More

There are high hopes that the new UCITS framework that took effect in July could herald rationalisation amongst Europe’s regulated hedge funds. While tax factors could slow down the process, UCITS has plenty of other growth drivers besides cost savings.Read More

As if there wasn't enough confusion in the roiling U.S. capital markets and regulatory environment, the U.S. Second Circuit Court has issued a decision that will make alpha that more elusive for hedge funds involved in shareholder activism. Read More

There's nothing like a good list of acronyms to confuse even the most immersed hedge fund aficionado. A new report by KPMG and RBC Dexia unintentionally takes the industry's affinity for acronyms up a notch. Read More

After being castigated in 2003 for their cozy relationship with their i-banking brethren, equity research departments are now accused of being in cahoots with the hedge fund community.Read More

Fiduciaries think of a client's needs before their own - sacrificing the latter if required. But does the requirement for a hedge fund manager to put their client's interests before their own help or hinder the search for alpha? It depends on who you ask.Read More

A funny thing happened on the way to blaming hedge funds for the global financial crisis, formulating a new set of rules to monitor them, politically compromising and scaling back on those rules and then slamming them through. Read More

Hedge fund crusader Phil Goldstein is back in court appealing a verdict that he says is unconstitutional. But this time around, the opinions of a small group of journalists, academics and students could have a profound and lasting impact on the way hedge funds communicate with the outside world.Read More

Yes. You read it right. Regulations that could actually lead to more alpha? Hey, it can happen.Read More

The SEC's attempt to regulate hedge funds in 2005 hinged on the definition of "client." By avoiding that question in 2010, its newest kick at the can seems likely to allow the issue to fester even longer. As a result, a University of Washington law professor ponders the question of to whom, exactly, a hedge fund adviser owes its fiduciary duty.Read More

It's easy to see why investors find insider trading morally objectionable. But if market prices are a critical form of information transmission, then does "some" insider trading actually help society? And if it does, then what kinds of insider trading?Read More

As UCITS-compliant hedge funds become increasingly popular among funds of hedge funds in particular there is growing concern that underlying managers may be bending the rules to get the UCITS seal of approval.Read More

With the practice of securities lending likely to undergo substantial regulatory change, a recently published paper argues that "CCPs", already being adopted, are the best way forward. Read More

A new report by Lipper examines the early impacts of the UK's endorsement of performance fees for mutual funds.Read More

A recent SEC ruling requires investment advisers to use "plain English" when communicating with clients. But for now, hedge funds can keep confusing people... Read More

As policymakers debate the value of hedge funds as liquidity providers, they should take note of this recent academic paper.Read More

There have been a lot of surveys on Europe's latest fashion trend: UCITSIII. Today, a guest author reports on some actual hard data on the topic. Read More

Panacea, cure-all, the ultimate fix for liquidity, transparency and due diligence issues - whatever you want to call it, UCITS-wrapped hedge funds appear here to stay. Read More

An update on a study of the infamous 2008 short-selling bans pins the blame squarely on regulators for inadvertently making a bad situation worse.Read More

UCITS-structured hedge funds continue to be the trend du jour for 2010, but the jury is still out on whether they are the best route to delivering liquidity, transparency and compliance.Read More