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Taking Aim – the SEC’s Continued Focus on Hedge Funds

November 26, 2014 |

November 2014 | Nicholas Lewis, McGuireWoods LLP


Legal and regulatory

“It is difficult to overstate how much the regulatory landscape for hedge fund managers has changed over the past four years.”1 So said Norm Champ, director of the Securities and Exchange Commission’s Division of Investment Management, in a recent speech wherein he outlined how the SEC has built on its newfound authority to regulate private fund advisers, including by taking advantage of its increased access to information and new analytical tools.2 As we’ve previously discussed in this newsletter, since Dodd-Frank, most investment advisers to private funds, such as hedge funds, now have to register with the SEC, thus subjecting them to SEC oversight and regulatory requirements.3

In recent months, the SEC has actively engaged with the industry through speeches, guidance updates, and examinations to counsel advisers on their newfound obligations and to gain a better understanding of the industry. Director Champ’s speech is one of the latest examples of this outreach. But, as we’ve discussed here previously, the SEC also has clearly conveyed that its increased scrutiny of private funds likely will lead to an increasing number of enforcement investigations and actions.4 Champ’s speech and other recent events confirm this trend.

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