WikiLeaks Has Hedge Funds Worried About New Disclosure Rule

Feb 3 2011 | 12:42pm ET

Most hedge funds have reacted with equanimity to newly-proposed reporting requirements, having seen them as more-or-less inevitable since the financial crisis. But some are beginning to express concerns, noting that, despite regulators' promises to keep the information confidential, the State Department WikiLeaks scandal has them worried.

The Securities and Exchange Commission and Commodity Futures Trading Commission last month unveiled a proposed rule that would require hedge funds, private equity firms and other private fund advisers to turn over information on leverage, counterparty risk and, most controversially, investment positions. The rules would fall primarily on the largest managers: Those with more than $1 billion in assets would have to make more frequent and detailed disclosures.

The regulators are working to reassure that what happened at the State Dept. won't happen at the SEC, CFTC or Financial Stability Oversight Council, and are pointing to the SEC's record of keeping secrets, but it hasn't won everybody in the industry over.

"WikiLeaks has more or less proven that anything you give to the government you have to assume could one day be public," lawyer Nathan Greene, whose practice includes representing hedge funds, told The Wall Street Journal. "It is impossible, after seeing State Department cables, to say to yourself, 'I'm going to package my most sensitive business information and give it to the U.S. government,' and do it without a pit in your stomach."

"We always have a concern about having our name attached to a particular portfolio position or particular strategy," BlueMountain Capital Management CFO David Rubenstein, who also serves as general counsel, added. "If it were disseminated publicly, it could come back to hurt us or hurt the market as a whole."

The joint SEC-CFTC rule is currently in a public comment period. The two regulators will have to vote one more on it before it is officially adopted.


In Depth

Q&A: Quad Advisors’ Borish Is Looking For Real Traders, Not Index Huggers

Aug 20 2014 | 1:43pm ET

Peter Borish, who served as founding partner and director of research at Tudor Investment...

Lifestyle

Viking Manager In Rent Dispute

Aug 11 2014 | 4:14am ET

A hedge fund manager is demanding most of his money back from his former landlord...

Guest Contributor

Majority Of Inflows Go To Brand Name Hedge Funds

Aug 12 2014 | 9:00am ET

Since the market correction of 2008, a vast majority of hedge fund net asset flows...

 

Editor's Note

 

Futures Magazine

PREVIEW July/August 2014 Cover

Inside Futures' 500th Issue

The July/August 2014 issue is our largest in years—filled with the best trading strategies and stories from 43 years of being the primary publication for commodity, stock, options and forex traders.

The Alpha Pages

TAP July/August 2014 Cover

Real talk on alternative investments, business & finance

The Alpha Pages Editor's Note