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Reuters – U.S. hedge funds and private equity firms told Congress on Tuesday that all advisers to private pools of capital should be subjected to the same level of federal scrutiny, including those managing venture capital funds.
A draft U.S. bill would require advisers of hedge funds and private equity funds to register with the Securities and Exchange Commission, thus forcing more disclosures to regulators and investors.
However, the draft House of Representatives bill exempts venture capital funds from mandatory registration with the regulator.
New York (HedgeCo.net) – Ms. Sandra A. Urie has been appointed to the board of 100 Women In Hedge Funds, further augmenting the organization’s network. Ms. Urie is the President and Chief Executive Officer of Cambridge Associates LLC, a global provider of independent investment advice and research to institutional investors and private clients.
Ms. Urie has held various positions at Cambridge Associates since 1985 and, before assuming the role as CEO, she served as the Chief Operating Officer and was responsible for directing the firm’s consulting practice. She is a member and vice-chair of the Investors’ Committee of the President’s Working Group on Financial Markets, which has worked to develop detailed guidelines that would define “best practices” for investors in private pools of capital in order to enhance investor protection and systemic risk safeguards. She currently serves on the Board of Advisors for the Yale School of Management, the Board of Overseers of the DeCordova Museum, and the Board of Visitors of the New England Baptist Hospital. In addition, she sits on the boards of The Plymouth Rock Company and Homesite Group Incorporated. She formerly served on the boards of Phillips Academy, Belmont Day School and Buckingham, Browne & Nichols School.
Before joining Cambridge Associates, Ms. Urie worked as a member of the faculty at Phillips Academy (Andover), where she taught Russian and served on the Admissions Office staff. She also served in the Phillips Academy development office where she was responsible for capital fund raising, and eventually she assumed the position of Associate Secretary of the Academy with responsibility for the school’s annual giving and alumni programs.
Anne Popkin, Chair of the Board of 100 Women in Hedge Funds and Principal, BlueCrest Capital, said, “We are pleased to welcome such a well-respected industry leader to our Board. We believe Sandra’s investment advisory experience coupled with her involvement in initiatives such as the President’s Working Group help us continue to represent, strengthen, and expand our investor member base.”
Ms. Urie said, “I look forward to working with the Board to strengthen 100 Women in Hedge Funds’ initiatives on member education, professional development, and philanthropy.”
Ms. Urie graduated from Stanford University and received a Master of Public and Private Management graduate degree from the Yale School of Organization and Management. Additionally, she holds the Chartered Financial Analyst designation.
The Hill – Venture capitalists breathed a collective sigh of relief Thursday when a proposal from the House Financial Services Capital Markets Subcommittee did not seek to treat them like private equity firms or hedge funds.
Venture capital investors had been lobbying against such a measure, saying that being required to register with the Securitiesand Exchange Commission like hedge funds and other private pools of money was unnecessary and expensive.
New York (HedgeCo.net) – Richard H. Baker, President and CEO of the Managed Funds Association (MFA) wrote a letter to MFA members this afternoon, highlighting today’s announcement by the Obama Administration requiring all advisers to hedge funds and other private pools of capital, including private equity and venture capital funds, to register with the Securities and Exchange Commission (SEC).
Baker highlights how the Administration’s proposed legislation would:
* eliminate the private adviser exception in the Investment Advisers Act and require hedge fund managers and other investment advisers to private investment pools with at least $30 million in assets under management to register with the SEC;
* eliminate the exemption from registration in the Advisers Act for certain commodity trading advisors registered with the CFTC if the commodity trading advisor acts as an investment adviser to a private fund (defined as a company that would be an investment company under the Investment Company Act of 1940 but for the exceptions contained in Section 3(c)(1) or Section 3(c)(7));
* give the SEC authority to require investment advisers to maintain records and submit reports of information relating to both the adviser and funds it manages, in order to allow for the supervision of systemic risk by the Board of Governors of the Federal Reserve and the Financial Services Oversight Council, and to provide such information to the Board and Council. The reported information must include at least, for each private fund, the amount of assets under management, use of leverage (including off-balance sheet leverage), counterparty credit risk exposures, trading and investment positions, and trading practices. Each adviser must maintain records of such information and make them available to the SEC upon request, and would be subject at any time to periodic, special, or other examinations by the SEC. Information provided by the SEC to the Board or Council would be kept confidential.
* give the SEC authority to require investment advisers to provide reports, records and other documents of private funds to investors, prospective investors, counterparties, and creditors, for the protection of investors or the assessment of systemic risk.
* permit the SEC to keep confidential any information in reports required to be filed with the SEC, except pursuant to requests from Congress or other federal agencies
* provide the SEC with the authority to define the term ‘client’ differently for different purposes of the Advisers Act and clarify other aspects of the SEC’s rulemaking authority with respect to registered investment advisers.
Click here to read the Administration’s press release announcing the proposed legislation.
CNBC – The Obama administration has sent legislation to Congress that would bring hedge funds and other private pools of capital under government supervision.
The proposal calls for the Securities and Exchange Commission to oversee hedge, private equity and venture capital funds. By registering with the SEC, their books would be open to federal inspection and they would be subject to disclosure requirements to investors and creditors.
Courthouse News Service – President Obama’s plan to overhaul financial regulations, to prevent a repeat of the country’s credit and banking catastrophe, is laid out in a "nearly final" 85-page document the president is expected to reveal today.
Among other things, the president proposes creating a National Bank Supervisor to oversee all federally chartered banks; strengthening capital requirements for banks; requiring hedge funds and other private pools of capital to register with the SEC; and regulating derivatives, including credit default swaps.
The plan would give the Federal Reserve more authority over large financial institutions that could threaten the financial system, and give the Federal Deposit Insurance Corp. greater power to seize and break up such institutions.
The document proposes five "key objectives;" 1. Promote robust supervision and regulation of financial firms; 2. Establish comprehensive supervision and regulation of financial markets 3. Protect consumers and investors from financial abuse; 4. Improve tools for managing financial crises; and 5. Raise international regulatory standards and improve international cooperation.
The first objective of the plan calls for "new authority for the Federal Reserve to supervise all firms that could pose a threat to financial stability, even those that do not own banks."
Wall Street Journal – As regulators gear up to monitor private pools of capital more, private equity firms have a message they really, really want to get across: we’re not hedge funds.
PE firms hope that they can educate regulators about the many, many ways in which they differ from hedge funds, and thus escape regulation – or at least be regulated differently.
New York (HedgeCo.Net) – Hedge fund regulation was the hot topic at this past weekend’s meeting of European Union leaders, when German Chancellor Angela Merkel hosted a summit in Berlin discussing ways to curtail the financial crisis.
Merkel joined leaders from The Netherlands, Spain, France, Italy, England, the Czech Republic and Luxembourg to agree on a unified EU stance prior to London’s G20 Summit in April, where all the world’s leaders will come together to discuss the financial crisis.
"We have today underscored our conviction that all financial markets, products and participants must be subject to appropriate oversight or regulation, without exception and regardless of their country of domicile,” said Merkel. “This is especially true for those private pools of capital, including hedge funds, that may present a systemic risk," she said, although the details of how hedge funds should be regulated still need to be worked out.
English Prime Minister Gordon Brown has also expressed his belief that there should be tighter regulation, despite the fact that London is Europe’s premier center for hedge funds.
"Together we will support oversight of under-regulated sectors and I also support proper disclosure and transparency of hedge funds," Brown said earlier this month.
French President Nicolas Sarkozy agreed, saying, “We want regulation of hedge funds, and we’re not going to put up any longer with the bonus reward system of traders and bankers.”
The EU leaders are scheduled to meet again this Sunday.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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Boston Globe – The leaders of Germany, Britain, France, and Italy yesterday said that the resources of the International Monetary Fund should be doubled, to $500 billion, to help head off new problems in countries already hit hard by the global economic and financial crisis.
The officials also said, in a statement clearly aimed at hedge funds and other big private pools of capital, that "all financing markets and participants" need to fall under regulation in the future. And they vowed to make a tough push against tax havens.
With one eye on a crisis that is rapidly spreading to Eastern Europe and even countries that use the euro, the leaders highlighted the crisis-prevention role of the IMF, an institution whose relevance to the current global economy seemed in doubt only a few years ago.
