September 12, 2012
Beth Wiener, Partner-in-Charge, Alternative Investment Group, Featured in AR Magazine Article "Tight Deadlines with Plenty of Uncertainty"
By Kathryn Tully
Summer is usually a time to relax and take a vacation, but not so if you are involved in regulatory compliance at a major hedge fund. Deadlines for hedge fund advisers to comply with new US regulations are coming thick and fast. In fact, the deadline already has come and gone for the first hedge funds to file Form PF, the enormous document including around 50 questions and requiring 2,000 data points that the SEC is demanding for newly registered funds under the terms of the Dodd-Frank Act.
However, some advisers believe a big burden will fall on those smaller funds that file Form PF later, even if they do have more time. “As daunting a process this is for large private fund advisers, it will be equally, if not more, challenging for smaller private fund advisers, who generally have less personnel in their organizations to support this effort,” says Beth Wiener, partner-in-charge of Marcum’s alternative investment group.
For funds large and small, the likely costs of compliance with Dodd-Frank as a whole are significant. According to Wiener, that can range from $25,000 to $125,000 for small managers, $125,000 to $500,000 for medium-size managers and in excess of $500,000 for larger ones, as fund managers will either need to do all the work in-house, which will require additional staff, or outsource it.
“Fund managers will most likely rely on their service providers – such as administrators and prime brokers – for information, which will increase those fees,” Wiener says. “Hefty technology costs will also be incurred in order to aggregate the data, map it, report it and store it for future use. All of those resources, as well as for industry consultants, will no doubt place a heavy financial burden on fund managers.”