Hedge fund compliance warning


THE Securities and Exchange Commission's Norm Champ has warned hedge fun managers to ramp up compliance oversight for any alternative mutual fund expansion.

Its Director of Division of Investment Management cited significant additional regulatory requirements for alt funds under the Investment Company Act.

The compliance regime for registered funds is more expansive than for an adviser-only compliance program. A complete overhaul of a firm's compliance infrastructure, specifically automated reporting and alerts, will require surveillance support from firms experienced with registered fund experience.

Champ cautioned: "Merely tacking on new policies and procedures to the adviser's existing program, without considering the overall impact to the adviser's business model, may increase the risk of compliance weaknesses, deficiencies or violations."

Source: SEC Newsroom