Compliance Costs

Compliance Costs

Hedge Funds, Buyout Firms See High Compliance Costs

Alternative investment firms, such as private equity firms and hedge funds, are facing new costs related to compliance. Hedge funds and buyout firms registering for the first time with regulators will have to pay a significant cost. The costs include legal, staffing and technology.
How much?

An Aite report released Monday says that depending on the size, complexity and products of an alternative fund, a portfolio management and accounting system could cost $100,000 to $400,000 at a minimum and over $1 million at most. Portfolio management systems are needed to retain the books and records of the hedge funds.

The estimates are contained in a report titled "Alternative Funds, Meet Dodd-Frank and the EU Directive."

Chief compliance officers won't come cheap, for instance. Such executives can earn from $300,000 to $500,000 a year, if they have previously worked for a regulator or have a legal background.

And this is just the tip of the iceberg. Source

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