Post by jannikki on Dec 12, 2006 20:40:09 GMT -4
NYSE Beefs up Hedge Fund Scrutiny
By Edward Hayes
December 12, 2006
While the SEC prepares to discuss hedge funds at its open meeting this week, NYSE Regulation announced that it would be stepping up its efforts to monitor the alternative investments.
The NYSE’s effort is part of a collaborative movement with the NASD, the SEC and the Chicago Board Options Exchange to stop insider trading in hedge funds. Also this week, the Senate Judiciary Committee began hearings on insider trading in hedge funds. The committee brought in attorneys and regulators. Congress is weighing legislative restrictions on hedge funds after a federal court threw out the SEC’s own hedge fund regulations earlier this year.
Robert Marchman, head of market surveillance at the Exchange, confirmed the news this week in published reports. He added the regulator would start within the next few weeks and focus on the hedge fund database it maintains.
The Exchange acted on hedge funds after officials began to see an increase in the proliferation of the funds on the Exchange. The other factor was an increase in mergers and acquisitions, according to the NYSE.
But one attorney noted that the recent decision to merge the regulatory arms of the NASD and NYSE may have played a role in the two SROs’ increased interest in the vehicles.
“Some of this is follow the leader and increasing their credibility to further enhance the prestige and get more support for the merger from their members,” said Mike Caccese, a partner in the law offices of Kirkpatrick & Lockhart.
NYSE Regulation will beef up the information it gathers on hedge funds, which includes the database and blue sheets. Those are documents that firms, which are under investigation, generate upon request of the regulators. They include information like the identity of an account holder for whom specific trades were executed and whether a transaction was a buy or a sell and long or short.
The NYSE is expanding its staff in this area, specifically people with specific expertise in the area.
Those in the industry who support the idea of the NYSE tackling insider trading include some who have had issues with regulators getting involved with hedge funds.
“I have no problem with it,” said Phil Goldstein, of Opportunity Partners who successfully sued the SEC over the hedge fund adviser registration rule. “Surveillance is good and it’s not intrusive. If you are making an honest buck, you won’t even know that they’re there.”
Goldstein clarified that the difference between this action and what the SEC tried to do with its rule is that the SEC’s rule was asking firms to do something that could impede business. But in this instance, the regulator will gather whatever data it can about its members and if it finds problems will refer them to its enforcement branch. If there appears to be issues with non-member firms, it will send the matter to the SEC.
The pending merger with the NASD will not impact the operation, as it is being run out of Market Surveillance, which is not merging and will also maintain its own enforcement division, the NYSE said.
www1.cchwallstreet.com/ws-portal/content/news/container.jsp?fn=12-12-06
By Edward Hayes
December 12, 2006
While the SEC prepares to discuss hedge funds at its open meeting this week, NYSE Regulation announced that it would be stepping up its efforts to monitor the alternative investments.
The NYSE’s effort is part of a collaborative movement with the NASD, the SEC and the Chicago Board Options Exchange to stop insider trading in hedge funds. Also this week, the Senate Judiciary Committee began hearings on insider trading in hedge funds. The committee brought in attorneys and regulators. Congress is weighing legislative restrictions on hedge funds after a federal court threw out the SEC’s own hedge fund regulations earlier this year.
Robert Marchman, head of market surveillance at the Exchange, confirmed the news this week in published reports. He added the regulator would start within the next few weeks and focus on the hedge fund database it maintains.
The Exchange acted on hedge funds after officials began to see an increase in the proliferation of the funds on the Exchange. The other factor was an increase in mergers and acquisitions, according to the NYSE.
But one attorney noted that the recent decision to merge the regulatory arms of the NASD and NYSE may have played a role in the two SROs’ increased interest in the vehicles.
“Some of this is follow the leader and increasing their credibility to further enhance the prestige and get more support for the merger from their members,” said Mike Caccese, a partner in the law offices of Kirkpatrick & Lockhart.
NYSE Regulation will beef up the information it gathers on hedge funds, which includes the database and blue sheets. Those are documents that firms, which are under investigation, generate upon request of the regulators. They include information like the identity of an account holder for whom specific trades were executed and whether a transaction was a buy or a sell and long or short.
The NYSE is expanding its staff in this area, specifically people with specific expertise in the area.
Those in the industry who support the idea of the NYSE tackling insider trading include some who have had issues with regulators getting involved with hedge funds.
“I have no problem with it,” said Phil Goldstein, of Opportunity Partners who successfully sued the SEC over the hedge fund adviser registration rule. “Surveillance is good and it’s not intrusive. If you are making an honest buck, you won’t even know that they’re there.”
Goldstein clarified that the difference between this action and what the SEC tried to do with its rule is that the SEC’s rule was asking firms to do something that could impede business. But in this instance, the regulator will gather whatever data it can about its members and if it finds problems will refer them to its enforcement branch. If there appears to be issues with non-member firms, it will send the matter to the SEC.
The pending merger with the NASD will not impact the operation, as it is being run out of Market Surveillance, which is not merging and will also maintain its own enforcement division, the NYSE said.
www1.cchwallstreet.com/ws-portal/content/news/container.jsp?fn=12-12-06