New York (HedgeCo.NET) Most of the time when you hear that the Obama administration has warned the hedge fund industry about a topic, you automatically think it is in regards to legislation about practices. That wasn’t the case at last week’s SALT conference in Las Vegas. This time the administration was warning the industry about hackers and cyber terrorists.
The Department of Justice sent John Carlin, assistant attorney general, to the conference for a closed-door meeting with hedge fund managers. Carlin urged managers to share information with the government when there is an attempted attack and he demanded that managers increase the attention paid to attempted attacks.Carlin stated that, “Hedge funds hold a tremendous amount of capital, incredibly sensitive proprietary information, and valuable algorithms, but they are small shops and they often have very weak IT.”
The Department of Justice is also attempting to put pressure on fund managers by targeting hedge fund investors with their message. “Investors should demand funds set out their cyber security policies,” Mr Carlin said.
The secretive nature of many hedge funds makes this a difficult situation as the funds don’t want to expose themselves to legal liability or antitrust issues.
According to Anthony Scaramucci, founder of hedge fund of funds SkyBridge Capital, “You do not feel insecure until you are breached,” he said. “The average person in the financial sector — myself included — is not as focused on these threats as they need to be.”