From the category archives:

Basics

A New Threat to Small Hedge Funds and the Less Affluent Investor

October 27, 2014

A debate brews between the U.S. Security and Exchange Commission (SEC) and the hedge fund industry about proposed changes to the current definition of accredited investor. The Dodd-Frank Wall Street Reform and Consumer Protection Act requires this definition be reviewed every four years. The definition of an accredited investor has not changed since 1982, except [...]

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Doors Opening – Doors Closing – the CalPERS Redemption

October 14, 2014

Every action has consequences. The CalPERS divestiture will have some unanticipated consequences as well. Here are a few. Doors that May Have Closed Two and twenty was already on the rails and headed out of town before the CalPERS announcement. One of the industry’s worst kept secrets is that most large pension funds and institutional [...]

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Discount Hedge Funds – Is This the Wave of the Future?

September 14, 2014

Even ardent defenders of hedge fund fee structures must acknowledge the impact a marketplace open to retail investors may have on the status quo. Is the hedge fund 2 and 20 rule going the way of the banking industry’s 3-6-3 rule? Disruption It is no revelation that 2 and 20 has been under assault for [...]

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Argentina – Victim or Victimizer

August 31, 2014

The retail credit universe is dominated by the FICO score. A consumer with a low FICO score will pay higher interest rates or suffer rejected credit requests. Similarly, a nation’s borrowing power is governed by scores from rating agencies. Moody’s, Standard and Poor’s, and Fitch are major players. High ratings make it possible for governments [...]

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First: Do No Harm

August 17, 2014

There are equivalencies that can be drawn between the physician’s Hippocratic Oath to patients, and the hedge fund’s primary responsibility to its clientele. Just as the physician pledges to do no harm, the hedge fund manager has a similar charge with respect to preserving the investor’s capital. Don’t lose any principal! Of course, along with [...]

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Imitation: The Most Sincere Form of Flattery

July 28, 2014

Most following the hedge fund industry are acutely aware that globally, hedge funds have more than $2.2 trillion in assets under management (AUM). This is a staggering sum by any measure and it continues to grow quarter over quarter. However, mutual funds remain the single largest draw for investor dollars, with $30 trillion in AUM [...]

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Regulators Shift Enforcement Focus to Hedge Fund Marketing Practices

July 16, 2014

The removal of restrictions on general solicitation, a consequence of the Jumpstart Our Business Startups (JOBS) Act, has created new opportunities for the U.S. Securities and Exchange Commission (SEC) to probe the depth of hedge fund pockets. The National Examination Program, part of the SEC’s Office of Compliance Inspection and Examinations, has made it clear [...]

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Insider Trading—A Regulatory Minefield

June 30, 2014

If the Internal Revenue Service is the governmental agency most feared by Americans in general, then the U.S. Securities and Exchange Commission (SEC) is the agency most feared by Wall Street, in general, and by hedge funds in particular. Illegal insider trading has been the SEC investigators’ priority target for decades and with the 2011 [...]

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A Pen, a Telephone, and the SEC?

June 16, 2014

Hardly a day passes without news of one financial scandal or another in the financial services industry, particularly hedge funds, with SAC Capital Advisors, LLC being one of the higher profile examples. Colossal Fines The Security and Exchange Commission (SEC) has posted a list of cases on its website detailing the results of its efforts. [...]

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Hedge Fund Groupthink – Real or Imagined

June 2, 2014

The implication of some in the financial media is that hedge funds and hedge fund managers are demonstrating a groupthink or herd mentality with respect to the investments they are making. The argument, which seems ludicrous, may or may not have merit. Of course, conventional wisdom suggests this to be an improbable argument because hedge [...]

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