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: Executive Recruiter Talks Hedge Fund Closures, Hiring Trends

Dec 19 2014 | 6:58am ET

This year, hedge funds have been closing at a rate not seen since the financial...

Lifestyle

Cooper-Hohn Won't Contest Divorce Settlement

Dec 18 2014 | 9:51am ET

The ex-wife of hedge fund billionaire Christopher Hohn will not contest a divorce...

Guest Contributor

Alternative Investment Funds Face A Communications Imperative

Dec 19 2014 | 6:10am ET

A handful of the top alternative investment firms on both sides of the Atlantic...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.