Gravitas Technology, an IT firm specializing in hedge funds and private equity, has created a compliance application designed to help clients comply with their SEC-imposed obligations under the Investment Advisor Act of 1940 Rule 206(4)-7.
Gravitas describes the application as a “white-glove”, turn-key approach to retention and search capabilities for years of email, IM, Blackberry, and records as well as disaster recovery for business continuity planning. In addition, anti- spam and anti-virus capabilities for email are included in the solution.
“Recently, there have been a number of launches of larger, billion dollar, multi-strategy, global hedge funds that require an institutional footprint from their inception,” explains Jayesh Punater, CEO and Founder of Gravitas. “Where investors used to be primarily high net worth individuals, many are now institutional investors who demand increased reporting requirements, compliance and disaster recovery. This need drives the development of more sophisticated technology. The idea of outsourcing technology is one that has gained recent momentum, especially with hedge funds who are primarily focused on investment and asset gathering activities.”
Gravitas says it has taken into consideration the recent launches of larger tier, billion dollar, multi-strategy hedge funds, as well as the upcoming deadline in February of 2006 for registering with the SEC as an investment adviser under the 1940 Act.
Gravitas Technology says it believes that outsourced and cost effective technology is much more appealing to the hedge funds arena than in-house technology. Though it concedes in some cases there are firms that will require solutions created within, Gravitas promises hedge funds buying its application savings of “tens of thousands of dollars in upfront costs by converting them into manageable monthly recurring expenses. This solution ends up at a fraction of the costs of implementing these systems in house.”
Costs are significant when associated with owning and operating internal compliance systems, says Gravitas. Not only will the cost of the third party products be an issue, but software and other related expenses can be a factor as well.
“Combine the known costs and then add the related items such as a viable SPAM filtering segment, an SEC Compliance solution, Blackberry hosting and Disaster Recovery, and what you’ll find is a $80K to over $100K hurdle on an internal network that can be outsourced for thousands less,” says Gravitas. “Not only that, but the outsourced solution is more redundant and robust than internal solutions. The model becomes cost effective and over a 5 year period provides better return on investment.”