In what appears to be a direct response to the Madoff scandal, the SEC has issued a proposed amendment to the custody rule applicable to registered investment advisers. Rule 206-4 currently offers certain protections to investment advisory clients. The proposed amendments, which seem certain to gain approval, go well beyond what is currently on the books. [...]
According to a report by research firm TowerGroup cited in Saturday’s New York Times, 8 out of 10 hedge funds are ill-prepared for hedge fund registration. This is a significant statistic because it shows the infrastructure of the industry will need a serious upgrade… at a time when performance has had a serious downgrade and [...]
The expanding pay-to-play probe of hedge fund “placement agents”, in combination with the central role that these intermediaries had in the Madoff scandal, is beginning to lead the hedge fund industry and its investors to focus as never before on their exact role and qualifications. Whereas in the past, funds may have left the business of raising money to such agents without much inquiry into [...]
