Mass. Seeks Info On Banks' Hedge Fund Recruiting Services

Oct 12 2011 | 6:41am ET

A day after its parent company's flagship first reported on the issue, the Boston Globe was able to say that its hometown securities regulator has launched an investigation into banks' provision of head-hunting services to hedge funds.

William Galvin, secretary of the Commonwealth, sent a letter of inquiry to five major banks yesterday, asking them for a list of clients they've offered employment referrals to over the last three years. Galvin was quoted in a Monday article in The New York Times saying that such services are "the type of relationship investors should know about, or simply shouldn’t exist."

Galvin, who has earned a reputation as something of a bête noir for hedge funds in recent years, said he isn't sure where his inquiry will go, if anywhere. He said the letters to Bank of America, Deutsche Bank, Goldman Sachs, Morgan Stanley and UBS were designed both to find out and to put those firms "on notice that these are issues that need to be explored."

Those banks and others on Wall Street have in recent years formalized previously informal recruiting services for hedge funds, hoping that the added service would help attract and retain prime brokerage clients. But Galvin believes the arrangements may violate gift-giving rules and other Massachusetts regulations, and that they may need to be disclosed to a hedge fund's investors.


In Depth

Q&A: Neil Azous Talks Global Macro Investing

Nov 24 2014 | 12:41pm ET

Neil Azous is the founder and managing member of Rareview Macro, an advisory firm...

Lifestyle

Griffin Selling Chicago Apartment

Nov 26 2014 | 11:40am ET

Citadel Investment Group’s Kenneth Griffin is making clear to his estranged wife...

Guest Contributor

Why The Big Money Is Going To Europe

Nov 14 2014 | 6:03am ET

Peer-to-peer lending was invented with the individual investor in mind. But despite...

 

Sponsored Content

    For Hedge Funds, Mastering Data Is Key To Success

    Nov 4 2014 | 9:45am ET

    Data management is important to every business, but for hedge funds, it is critical. FINalternatives recently asked Peter Sanchez, CEO of Northern Trust Hedge Fund Services, how fund managers can deal with the demands of managing data while at the same time remain transparent and abide by operational best practices. Read more…

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

November 2014 Cover

Building a better market

Reg NMS created a huge bifurcation in equity markets and while much of what has followed has been positive, in terms of lower fees and greater liquidity, many traders would like to see the market come...

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.