A Tempest In An SECpot

It had all the elements of a really good story. The Feb. 1 deadline for hedge fund registration looms, and a worker at the Securities and Exchange Commission tells a prominent financial publication that "no lights go on" indicating "hedge funds" when reviewing the form investment advisers submit for registering HFs. Trouble is, that may not exactly be the case. Financial News, which originally carried the story, also cited industry watchers puzzled by such an oversight by the oversight agency. But, according to a spokesman for the SEC's Division of Investment Management, the commission "did, in fact, amend Form ADV to require advisers to identify any hedge funds they advise." He points out that the "confusion" is over the fact that Schedule D of the form refers to them as "private funds," the term used in the rule. In fact, Section 7B of the form requires the listing the name and assets of the hedge fund, and Response 6 of Form ADV asks the registrant to list "Other pooled investment vehicles," which would include hedge funds. One hedge fund professional, giving his thoughts on the registration confusion, told Hedge Fund Daily, "If complaints noted in the Financial News story are representative of the quality of the personnel running hedge funds and their competence, it only justifies the SEC's demand for regulation and oversight. Incompetent management begets regulation."