Archive for February, 2010

Hedge Funds IOSCO Regulations

IOSCO Releases Template for Hedge Fund Info Requirement

The government regulations of the hedge fund industry, which we’ve been covering on this blog, is starting to develop.  The International Organization of Securities Commissions published a template for the information that regulators will require hedge funds to submit.  Although many funds already comply with the basic data requirement, it will now be necessary for hedge funds to submit information to their local regulator including the name of auditors, number of funds, recent performance data, AUM and long and short positions.  

The International Organization of Securities Commissions (IOSCO) published a template for supervisors listing 11 types of data that hedge funds will be required to provide.
“IOSCO believes that regulators should seek to develop a comparable and consistent set of data to be collected from local hedge fund managers and advisers to monitor systemic risks and prevent gaps in regulator reporting requirements,” Kathleen Casey, chairman of the body’s technical committee, said in a statement.

The list of data includes basic information such as the manager’s name, number of funds and equity owners; as well as the names of auditors, custodians, recent performance, redemptions, total assets under management and the value of long and short positions in different assets.

Geographic spread, liquidity of a fund’s assets, the value of borrowings, net credit counterparty risk and top 10 positions will also have to be disclosed. 

IOSCO members regulate more than 95 percent of the world’s securities markets in over 100 countries…Source

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HedgeCo News – Former hedge fund manager Arthur G. Nadel has pled guilty to 15 counts of securities fraud, mail fraud, and wire fraud, the US attorney for the southern district of New York said.

The indictment claims that from 1999 through January 2009, Nadel perpetrated a Ponzi scheme to defraud investors in six different investment funds, consistently loosing money and using his investor money to fund his lifestyle and several businesses, including a real estate project in North Carolina, his wife’s flower shop, and his purchase of several private planes.

From 1999 through January 2009, nearly 250 people invested more than $397 million with the Funds. NADEL received tens of millions of dollars in management fees and performance incentive fees. As a result of Nadels’s Ponzi scheme, investors suffered losses of approximately $162 million.

The hedge fund manager pleaded guilty to six counts of securities fraud, one count of mail fraud, and eight counts of wire fraud, and faces a maximum penalty of 20 years in prison on each of the counts.

Nadel faces a maximum fine of the greater of $5 million or twice the gross gain or loss from the offense. For the mail fraud and wire fraud charges, he faces a maximum fine of the greater of $250,000, or twice the gross gain or less from the offense.

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