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Fund of Hedge Funds SEC

Fund of Hedge Funds SEC

SEC Reportedly Looking into Fund of Hedge Funds

Fund of hedge funds are facing scrutiny from the Securities and Exchange Commission. The fund of funds industry has suffered big losses and failed to recover as quickly as their hedge fund investments. Now, the SEC is conducting what is called a "sweep exam", in which the regulator examines a number of funds (about a dozen fund of hedge funds in this case) and collects information to develop leads but this does not necessarily mean that anything improper has occurred at the funds.
The Securities and Exchange Commission is examining whether firms that collect fees for funneling investors into hedge funds are properly overseeing client money and dealing with potential conflicts of interest, people familiar with the matter said.

The inquiry has identified about a dozen investment-advisory firms for questioning but could expand, according to people familiar with the matter, making it one of the SEC's broadest examinations ever of funds of hedge funds and advisers specializing in hedge funds.

According to documents reviewed by The Wall Street Journal, the inquiry is a "sweep exam" by the SEC's Office of Compliance Inspections and Examinations. That office's responsibilities include identifying fraud and other securities-law violations in investment firms, securities exchanges and Wall Street brokerage firms.

The sweep also could include alternative-investment advisers focused on private equity and other registered advisers catering to pension funds, people familiar with the situation said. Source


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