Hedge fund managers’ worry list has gotten longer. Aside from alpha and beta, competition and keeping clients satisfied, there is new urgency around compliance and regulatory risk. The latter issues have been simmering since the financial crisis and the Dodd-Frank Act’s requirements for registration of private fund advisers and now figure prominently in regulators’ comments about examination priorities and policymakers’ concerns about financial stability.
In an October 2015 speech to a Managed Funds Association conference, Securities and Exchange Commission chair Mary Jo White highlighted “cracks in the bulwark of investor protection” in hedge fund advisers’ “marketing materials that included back-tested performance numbers, portable performance numbers and benchmark comparisons without key disclosures.”
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