{"id":40328,"date":"2014-01-30T09:05:16","date_gmt":"2014-01-30T14:05:16","guid":{"rendered":"http:\/\/www.hedgeco.net\/news\/?p=40328"},"modified":"2014-01-30T09:17:16","modified_gmt":"2014-01-30T14:17:16","slug":"sec-issues-risk-alert-for-hedge-funds","status":"publish","type":"post","link":"https:\/\/hedgeco.net\/news\/01\/2014\/sec-issues-risk-alert-for-hedge-funds.html","title":{"rendered":"SEC Issues Risk Alert For Hedge Fund Advisers"},"content":{"rendered":"<p><a href=\"http:\/\/www.hedgeco.net\/news\/wp-content\/uploads\/2014\/01\/images-3.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignright size-full wp-image-40334\" alt=\"images (3)\" src=\"http:\/\/www.hedgeco.net\/news\/wp-content\/uploads\/2014\/01\/images-3.jpg\" width=\"172\" height=\"130\" \/><\/a>New York (HedgeCo.Net) &#8211; The SEC\u2019s Office of Compliance Inspections and Examinations (OCIE) has issued a 10 page Risk Alert (<a href=\"http:\/\/www.sec.gov\/about\/offices\/ocie\/adviser-due-diligence-alternative-investments.pdf\" target=\"_blank\">pdf<\/a>) on the due diligence processes that investment advisers use when they recommend or place clients\u2019 assets in alternative investments such as hedge funds, private equity funds, or funds of private funds.<\/p>\n<p>\u201cMoney continues to flow into alternative investments. \u00a0We thought it was important to assess advisers\u2019 due diligence processes and to promote compliance with existing legal requirements, including the duty to ensure that such investments or recommendations are consistent with client objectives,\u201d said OCIE Director Drew Bowden.<\/p>\n<p>Some issues the alert mentions are that advisers are:<\/p>\n<ul>\n<li>Seeking more information and data directly from the managers of alternative investments<\/li>\n<li>Using third parties to supplement and validate information provided by managers of alternative investments<\/li>\n<li>Performing additional quantitative analysis and risk assessment of alternative investments and their managers.<\/li>\n<\/ul>\n<p>Additionally, staff observed certain deficiencies in several of the advisory firms examined, including:<\/p>\n<ul>\n<li>Omitting alternative investment due diligence policies and procedures from their annual reviews, even though these investments comprised a large portion of certain advisers\u2019 investments on behalf of clients<\/li>\n<li>Providing potentially misleading information in marketing materials about the scope and depth of due diligence conducted<\/li>\n<li>Having due diligence practices that differed from those described in the advisers\u2019 disclosures to clients.<\/li>\n<\/ul>\n<p>Advisers are required by Rule 206(4)-7 under the Advisers Act to adopt and implement written policies and procedures reasonably designed to prevent violations of the Advisers Act and to annually review the adequacy of those policies and procedures and the effectiveness of their implementation.<\/p>\n<p>These requirements include:<br \/>\n(i) naming a Chief Compliance Officer (\u201cCCO\u201d) to administer their programs;<br \/>\n(ii) adopting compliance policies and procedures; and<br \/>\n(iii) completing annual reviews of the effectiveness of their compliance policies and procedures.<\/p>\n<p>Additionally, while typically not incorporated into the advisers\u2019 compliance manuals, many of the advisers examined by the SEC did have formal due diligence policies and procedures, the report concludes.<\/p>\n<p>Alex Akesson<br \/>\nEditor for\u00a0<a title=\"hedge funds\" href=\"http:\/\/www.hedgeco.net\/\">HedgeCo.net<\/a><br \/>\n<a href=\"mailto:alex@hedgeco.net\">alex@hedgeco.net<\/a><br \/>\n<a title=\"hedge fund\" href=\"http:\/\/www.hedgeco.net\/\">HedgeCo.Net<\/a>\u00a0is a premier\u00a0<a title=\"hedge fund database\" href=\"http:\/\/www.hedgeco.net\/\">hedge fund database<\/a>\u00a0and community for qualified and accredited investors only. Membership in\u00a0<a title=\"hedge fund\" href=\"http:\/\/www.hedgeco.net\/\">HedgeCo.net<\/a>\u00a0is FREE and EASY. We also offer FREE LISTINGS for\u00a0<a title=\"hedge fund\" href=\"http:\/\/www.hedgeco.net\/\">Hedge Funds<\/a>!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>New York (HedgeCo.Net) &#8211; The SEC\u2019s Office of Compliance Inspections and Examinations (OCIE) has issued a 10 page Risk Alert (pdf) on the due diligence processes that investment advisers use when they recommend or place clients\u2019 assets in alternative investments [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12,919,3],"tags":[],"class_list":["post-40328","post","type-post","status-publish","format-standard","hentry","category-hedge-fund-regulation","category-hedge-fund-research","category-hedgeco-news"],"_links":{"self":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/40328","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/comments?post=40328"}],"version-history":[{"count":6,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/40328\/revisions"}],"predecessor-version":[{"id":40336,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/40328\/revisions\/40336"}],"wp:attachment":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/media?parent=40328"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/categories?post=40328"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/tags?post=40328"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}