(April 8, 2014) — The US Securities and Exchange Commission (SEC) has developed a specialist group to examine the workings of private equity and hedge funds, according to media reports.
Following the introduction of the 2010 Dodd-Frank law, most mid- and large-sized private equity and hedge funds have registered with the SEC, but some commentators had criticised the SEC for its lack of specialists, given the more complicated and illiquid nature of some of these funds. In response, the SEC has reportedly developed this new dedicated unit.
Reuters suggested this unit would be looking at how private equity and hedge funds value their assets, disclose their fees, and communicate with investors.
The SEC has been forced to ask Congress for more resources to fund new inspections. SEC Chair Mary Jo White told a US House of Representatives appropriations panel last week that the regulator examined just 9% of registered investment fund advisers in the last fiscal year.
It currently has about 450 examiners, accountants, and lawyers in 12 offices focusing on investment advisers and companies. In its fiscal 2015 budget request, the SEC asked for a further 316 staff to add to its examination program in the Office of Compliance Inspections and Examinations, where the new hedge fund and private equity unit is based.
“There is an immediate and pressing need for significant additional resources to permit the SEC to increase its examination coverage of registered investment advisers so as to better protect investors and our markets,” White said in prepared testimony to the committee on April 1.
The SEC has declined to comment on Reuters’ report.
The newswire reported that the new private fund unit will be co-chaired by Igor Rozenblit and Marc Wyatt. Rozenblit joined the asset management unit of the SEC’s enforcement division in 2010 and is a former private equity professional. Wyatt is a hedge fund veteran who joined the SEC in 2012 as a private funds examiner.
It is believed the unit will initially comprise existing staff in four of the SEC’s regional offices that will work part-time with Rozenblit and Wyatt on fund examinations. If successful, the SEC plans to expand the unit over the course of the next six to 12 months to more regional offices.
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