Hedge Fund Compliance 2009: The Year in Review
For hedge funds, 2009 was certainly the year of anticipation. Anticipated new rules dominated the headlines and planning meetings. And it seemed like almost weekly, there were new scandals and additional revelations about the Madoff case that left everyone talking over the water cooler, trying to predict what the next shoe to drop would be.
Will registration requirements pass, and what will the size threshold and reporting requirements be? And that custody rule that drew so many comments throughout the year– will that be passed in 2010? 2009 saw the specter of anti-money laundering requirements for hedge funds, as well as the Form SH that was in effect for months before being dropped. The development of new EU requirements continued throughout the year and will do so into 2010 as those have yet to be finalized. The effect of the EU requirements on US fund advisers should not be under-estimated and is a topic that is being closely watched.
The year also saw tremendous developments in the litigation area and the bolstering of prosecutorial muscle. Starting the year with the Madoff scandal in full bloom, and moving into numerous new Ponzi schemes being uncovered, the year wound up with the Galleon insider trading case which featured the first use of wiretaps in such a case. Increasing integration of governmental arms at multiple levels, from the SEC to the States and other federal agencies, including prosecutors’ offices was a key advance in 2009.
So what should an average hedge fund adviser do to get ready for 2010? Easy… fasten your seatbelt, and either get, or stick with, a full-blown compliance program. Wishing you all the best for the new year!
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