WEST PALM BEACH, FL (www.hedgeco.net) – Hedge fund managers investing in bank debt and capital structure may come under the spotlight with the implementation of the new SEC imposed hedge fund laws.Such strategies may come under increased scrutiny once the new laws take effect, because such issue has been a hot topic in the loan markets for quite some time.

Marc Baum, principal at the Solel Group said, “These issues were here regardless, but the SEC will know who the investment advisers are and will have a much clearer idea of their strategies.� According to Baum, hedge funds playing the bank debt markets already know that when they receive Material Non Public Information {MNPI} such information should not be used to benefit from trading public securities.

Another manager, Howard Rubin, senior managing director of Boldwater Capital cautioned that hedge funds conducting business in the public arena should be very careful because it is easy for firms trading public and private debt instruments to get private information. Joe Moroney a portfolio manager at Aladdin Capital Management explains that their firm has a compliance policy, which prevents it from trading infractions. He said their firm maintains a restricted list of companies, which they have received private information on.

Moroney also explained that hedge funds trading distressed loans have some challenges; hedge funds trading the distressed debt market are required to sign confidentiality agreements. He noted that hedge funds trading public securities with private information could be caught from bank records because banks usually keep such information on file.

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

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