Massachusetts authorities launched an investigation into investment banks leasing office space for hedge funds. William Galvin, Massachusetts’ secretary of state, is looking into the ‘hedge fund hotels.’ This practice involves banks offering cheap rent to hedge funds, but then charging high trading fees, which are passed on to investors.
“It’s really about fairness to average investors and openness in the financial-services industry,” says Galvin. Galvin says he asked for documents from UBS, and the bank has confirmed it is aiding the authorities.