WEST PALM BEACH, FL (www.hedgeco.net) – The National Association of Securities Dealers said yesterday that it is probing the sales of hedge funds to investors, according to Dow Jones News. BarryGoldsmith told Dow Jones, �The marketing and sales of hedge funds to individual investors has been an on-going focus of theNASD.�

A number of brokerage companies have received inquiry letters from industry regulators relating to the sale of hedge funds to investors. Goldsmith also told Dow Jones that the NASDAQ is continuing with its efforts to examine such issue, but no details were provided. He added, “We are continuing to look at issues in this area but cannot comment on any of the specifics.” Some of the firms receiving the inquiry letters included Citigroup, Merrill Lynch, and UBS AG.

According to Bloomberg, the NASD inquired from the firms what warnings they issued to potential hedge fund investors purchasing hedge fund products. However the NASD authorities explained that the letters do not necessarily mean that the regulators have reached any decisions on the matter.

According to the report, some of the firms introduced hedge fund products that accepted small minimum investments as low as $25,000. It is still unclear if the firms violated any rules or not, but the central issue being looked at by the regulators is whether the firms tried to persuade their non traditional customers to purchase their hedge fund products.

NASDAQ has levied fines in the past against firms violating the rules pertaining to marketing of hedge fund products to non-traditional clients.

Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net

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