Spurred by the SEC’s approaching February deadline that will make it mandatory for hedge fund advisers to be registered, SEI hosted a panel to discuss further ways to shape the ethical boundaries for hedge fund players.
While registration seems like a small step, Jim Volk, chief accounting officer and chief of compliance at SEI, commended the SEC’s call for accountability.
“It is about getting your business ready to operate in a regulated environment – and many aspects of that will be new to previously unregistered advisers,” Volk said.
The panel suggested other ways to regulate hedge fund advisers, including holding them to a code of ethics, which would require hedge fund partners to disclose their personal holdings and trades.
“In the bigger picture, it will mean hedge funds have to undergo a major cultural shift that could affect many aspects of their operations,” said Paul Schaeffer, director of SEI knowledge partnership.
The 10 key ethical recommendations of the panel focused on increasing the transparency of hedge fund practices, ranging from reducing the use of soft dollar compensations for absorbing the loss of erroneous trades, the acceptance of gifts for trading stock, and email surveillance.