FINRA Burned By Hedge Fund, P.E. Investments

Sep 28 2009 | 11:32am ET

A key U.S. self-regulatory agency hasn’t done a very good job of regulating its own risky investments.

The Financial Industry Regulatory Authority has sharply curtailed its investments in hedge funds, private equity funds and other volatile investments after taking a bath on them last year. The regulator, formed two years ago by the merger of the National Association of Securities Dealers and NYSE Regulation, saw its $1.2 billion investment fund fall 27% last year. In response, FINRA sharply increased its fixed-income allocation to 50%, at the expense of some of the 10 hedge funds and 20 private equity firms that made up about half of FINRA’s money managers last year.

Among the alternative investment firms that FINRA had money were Farallon Capital Management, Alinda Capital Partners and Siguler Guff & Co., The Wall Street Journal reports.

FINRA said the losses “have in no way hindered our ability to fulfill our regulatory responsibilities.” But they’ve drawn a lawsuit from one member firm.

Inglewood, Calif.-based Amerivet Securities has sued the regulator, alleging that it was “reckless in pursuing high-risk strategies inappropriate to preservation of capital.”


In Depth

GSAM's Papagiannis: Liquid Alternatives For The Long Run

Apr 21 2017 | 8:44pm ET

Interest in liquid alternatives cooled a bit last year amid a broad shift in investor...

Lifestyle

Aston Martin Returns To Debt Market As DB11 Drives Turnaround

Mar 31 2017 | 5:21pm ET

James Bond’s preferred carmaker is returning to the public debt markets for the...

Guest Contributor

Debunking Conventional Investment Wisdom (Part II)

Apr 17 2017 | 5:56pm ET

The alternative investment industry is currently replete with buzzwords around data...

 

From the current issue of