Adhering To Disclosed Fee And Valuation Methodologies Is Crucial For Hedge Fund Managers To Avert Enforcement Action

(Hedge Fund Law Report) The SEC continues to focus on the fee and valuation practices of investment advisers. See “Current and Former SEC, DOJ and NY State Attorney General Practitioners Discuss Regulatory and Enforcement Priorities” (Jan. 14, 2016). Although disclosure does not necessarily cure all potential issues, adherence to disclosed practices is essential. See “Explicit Disclosure of Changes in Hedge Fund Investment Strategy to Investors and Regulators Is Vital to Reduce Risk of Enforcement Action” (Oct. 29, 2015). The SEC recently took forceful action against an adviser that manages several publicly traded funds, alleging that the adviser disregarded fund disclosures regarding calculation of management fees and valuation of fund assets.

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