Hedge Fund Compliance - Anticipating the Registration Requirement
The conventional wisdom is that hedge funds in the US will soon face a registration requirement. There are three pending bills with varying proposals currently pending in the House and Senate.
What can funds that are currently unregistered do to prepare for this change in status? Are there any steps that can be taken in advance that will make the transition easier?
While it is difficult to prepare when the exact provisions of the bill are unknown, we believe there are at least two things that can be done now:
1. Think about who your chief compliance officer will be. Surely the registration requirement will call for a designated CCO. Hedge funds can begin thinking now about who has the qualifications and time available to wear this hat, and keep in mind that this role can be shared with other roles in the organization, ie., a CCO/CFO.
2. Where, oh where, are your books and records? This is another foregone conclusion as a registration requirement. The key here is to have at least some idea now as to where your key documents are located and to fill in as many missing pieces in advance as possible. For example, are all your investment advisory agreements signed? Where are the originals? What about your client’s subscription documents? These are two fairly obvious places to start.
And remember, there is lots of help available in the industry to assist with the registration process. A great starting place is the SEC website itself, at www.sec.gov.
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