SEC Hedge Fund Data
SEC Sifting Through New Data from Hedge Funds
U.S. financial regulators are looking through a pile of data supplied by hedge funds in order to assess the risk that the funds might pose to investors. To date, about 1,400 private money management firms have disclosed previously private information to regulators in order to comply with the Dodd-Frank financial regulation passed in 2010.
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. Source
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