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Hedge funds have always been regulated, but since the passage of Dodd-Frank a number of
regulatory steps were put into place. Almost all hedge funds will first report to the Securities
and Exchange Commission. An additional number of hedge funds will then also report to the
Commodity Futures Trading Commission, and among the larger firms, they will also have
to report to the Financial Stability Oversight Council. The goal of all of this reporting
requirements is to ensure that regulators really know what is going on inside the industry;
and yes, there are penalties for those who simply do not meet their reporting requirements.
So today, hedge funds are thoroughly regulated with regular reporting intervals; with detailed
information; which not only gives regulators good insight into the risk they present, but
helps investors to make educated investment decisions.