Reuters – Hedge fund managers, many of which were forced to register as investment advisers for the first time this month, now have a new worry: legions of government inspectors poring over theirbooks and finding arbitrary violations.
At an industry conference on Monday, hedge fund managers, many of which resisted the new U.S. Securities and Exchange Commission rules, expressed worry that inexperienced SEC inspectors will be overly broad in interpreting securities laws.
“This is a constant source or frustration for us,” said Karl Wachter, general counsel for Greenwich, Connecticut-based Amaranth Advisors, a $7.5 billion hedge fund. “There are all these ‘off the record’ rules.”
The SEC has long required institutional investors, mutual funds, pension plans and others to disclose details about personnel, holdings and other details about their funds.
But as the hedge fund industry grew over two decades to exceed $1 trillion in assets, the SEC made most hedge funds subject to the same rules, including being subject to spot inspections of their books and trading positions.
