2012-04-11 — wsj.com
About 1,400 new firms, including Moore Capital Management and Tiger Global Management, disclosed new details on their funds, investors, brokers and other facts ahead of a March 30 deadline.
The Dodd-Frank financial overhaul included a provision requiring hedge-fund, private-equity and other private-fund advisers of a certain size to register with the SEC, in a bid to bring more transparency to one of the more secretive corners of Wall Street. The SEC is using the new disclosures to beef up the data it streams through its analytics to look for signs of trouble.
For one, the regulator now can zero in on funds that might pose greater risks to investors, including those that mark the value of their assets themselves rather rely on independent valuations.
Other information found in the advisers' disclosures, including the names of their prime brokers and auditors, can prove useful to the SEC, too.
Mr. Plaze said regulators now are able to "reverse engineer" the data across a wider range of scenarios to ferret out potential areas of weakness based on tips, complaints and the agency's own work, including instances where the fund advisers are the victims. For example, if a prime broker or auditor has drawn scrutiny, regulators could look for other clients of theirs that may be unaware of the issue, he said.
Historically, the agency often knew little about a given manager until the manager landed on the radar of its enforcement division.
"It's sort of our first census of the industry," Mr. Plaze said of the new provision. "This gives us a powerful new tool to police the markets."
While many of the most high-profile hedge-fund advisers have long registered voluntarily with the SEC, in part to attract money from institutional investors, others historically had relied on an exemption for advisers with fewer than 15 clients, or funds. Dodd-Frank did away with the 15-client exemption.
Comments: Be the first to add a comment
Note: Comments may take a few minutes to show up on this page. If you go to the forum thread, however, you can see them immediately.