10:55 AM
Hedge Funds Push Back on Disclosure
During the comment period of new rules that will increase the scrutiny of hedge funds, some fund managers are pushing back at the Fed's new demands for data. Further, some hedge funds are invoking the recent Wikileaks' controversy, saying that their data is not guaranteed once it is handed over to the government.
"We always have a concern about having our name attached to a particular portfolio position or particular strategy," David Rubenstein, the chief financial officer and general counsel of BlueMountain Capital Management, tells the Wall Street Journal. His fund has $4 billion under management. "If it were disseminated publicly, it could come back to hurt us or hurt the market as a whole," adds Rubenstein.
Even hedge funds associations are weighing. The Managed Funds Association, a Washington DC hedge-fund lobbying body, said they aren't fighting what regulators are asking from private funds, as long as they "keep that information confidential," Stuart Kaswell, the association's general counsel, tells the WSJ.
The newly proposed rules under Title I of the Dodd-Frank law state that hedge funds will have to register and provide data to the Office of Financial Research, a newly formed office that answers to the US Treasury Department. Hedge funds have long operated in the shadows and are, characteristically, reluctant to participate in the new rules.
"WikiLeaks has more or less proven that anything you give to the government you have to assume could one day be public," says Nathan Greene, a lawyer with Shearman & Sterling LLP who represents hedge funds, in the WSJ article.
"It is impossible, after seeing State Department cables, to say to yourself, 'I'm going to package my most sensitive business information and give it to the U.S. government,' and do it without a pit in your stomach," he tells the WSJ.
Phil Albinus is the former editor-in-chief of Advanced Trading. He has nearly two decades of journalism experience and has been covering financial technology and regulation for nine years. Before joining Advanced Trading, he served as editor of Waters, a monthly trade journal ... View Full Bio