Disclosure for Hedge Funds Holding Cash

Over the past weeks of market turmoil, we have seen reports of hedge funds taking large defensive cash positions in order to preserve capital.  For example, the Wall Street Journal reported earlier this week that Steve Cohen’s SAC Capital is half in cash and other short term instruments.

While understandable, compliance professionals need to be alert to significant moves to cash which are not fully disclosed in offering materials and communications to clients.  If your firm is in a defensive cash position right now, this is the time to recheck your offering documents as well as to contemplate additional communications with your investors. 

Remember — proper disclosure is the foundation of a sound compliance program.