SEC's Top Cop Says Top-Performing Hedge Funds Under The Microscope

Mar 11 2011 | 1:21pm ET

Looking out of insider-trading and other market malfeasance, the Securities and Exchange Commission is taking a very hard look at the very best hedge funds.

The regulator's enforcement chief, Robert Khuzami, told a House of Representatives subcommittee that the SEC was focusing on the best-performing hedge funds as it combs the markets for illegal activity.

"We're now doing things like canvassing all hedge funds for aberrational performance," Khuzami said yesterday, looking for "anybody who is beating market indexes by 3% and doing it on a steady basis."

He added the SEC was also focusing on high-frequency trading and pension-liability analysis.

Khuzami made the announcement as part of a plea for more money for the SEC, which he says needs it as "we are more and more faced with the need to understand and identify wrongdoing in products and markets, transactions and practices that are increasingly complex or fast-paced or both," he said. "For those reasons our resource needs are most acute in the areas of IT, data access and analysis, human expertise and paraprofessional and administrative support."

Khuzami's statement came as SEC Chairman Mary Schapiro, on the other side of Capitol Hill, told senators the agency needs more than $260 million in budget increases to, in part, hire more than 100 staffers to monitor hedge funds.

House Republicans have said the agency's budget should be cut by $25 million.


In Depth

Q&A: Omni Macro Fund Bullish On India, Watching China

Mar 4 2015 | 3:35pm ET

Omni Macro Fund was formed in 2007 by Stephen Rosen, previously a prop trader at...

Lifestyle

Hedge Fund Manager Out as Minnesota Wild Minority Owner

Feb 25 2015 | 2:45pm ET

New York hedge fund manager Philip Falcone is no longer a minority owner of the...

Guest Contributor

Managing Diversification And Drawdowns In The “New Normal”

Mar 5 2015 | 2:42pm ET

In 2008-2009 diversification alone failed to provide adequate risk management for...

 

Editor's Note