|  | | 2007 News and Press Releases | | |
HEADLINE NEWS:
SEC Keeps Mum On Hedge Funds
Sam Schulz
Securities Law360. December 6, 2007
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EXCERPT: The U.S. Securities and Exchange Commission has already questioned hedge funds about their potential insider trading. Now, although the agency remains tight-lipped, lawyers suspect the probes might be expanding in other directions, too. Some lawyers think the SEC might be investigating whether banks and other big investors might be leveraging their clout to access hedge funds' investment strategies, Reuters reported Wednesday. Paul Huey-Burns of Dechert LLP told Law360 on Thursday said that, given the ongoing crackdown on hedge funds' often opaque workings, he would not be surprised if the agency is pursuing such a tack. “If you're a big enough investor, many funds are willing to share aspects of their strategies as a way of encouraging the financial institution to become an investor. It's a function of how much the investor is willing to invest in the fund,” he said. Chuck Landy of Pillsbury Winthrop Shaw Pittman LLP disagreed. “Hedge funds regard their positions and the information they have as highly proprietary, so if there are hedge funds that are sharing information with their investors, I have not heard of it,” he said. To Huey-Burns, however, such a probe would represent just another instance of “the SEC tracing out all of the different informational threads that exist in the marketplace and congregate in hedge funds.” Chris Steskal of Fenwick & West LLP agreed that the agency had taken increasingly tough stance on the much-maligned funds. “The SEC certainly would like to make a case against hedge funds. There is a perception in the SEC that hedge funds can't be making those results completely on their skill sets, that there must be something else going on,” Steskal said. That perception prompted the SEC in July to form a task force devoted specifically to hedge funds and in September to send out requests to dozens of funds' compliance officers seeking information about public companies where the funds' investors, employees, relatives or clients were top executives. |
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