Saturday, 26 July 2014
Last updated 18 hours ago
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.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…