Kelli Moll Talks Hedge Fund Regulation and Enforcement with Metro Corp Counsel

Metropolitan Corporate Counsel interviewed Akin Gump investment management partner Kelli Moll on the state and future of the regulation and enforcement of hedge funds, the resulting article titled “Hedge Fund Scrutiny Continues: Heightened attention is driving up costs and increasing.”

Among the points Moll made during the interview:

  • Changes in the hedge fund industry since the 2008 financial crisis: “The main changes…are threefold: changes in the registration requirements for investment advisors, requiring most advisors who were previously exempt from SEC registration to register; changes in the European landscape for marketing investment funds; and changes in the inspection and enforcement environment. The additional regulation has resulted in increased transparency and reporting to the regulators, including the filing of Form PF and Annex 4 in Europe, and, in general, has increased the cost of compliance.”
  • Changes in fund governance since 2008: “With European managers, independent directors are more the norm, and the governance role historically has been more robust than with U.S. managers. Post-crisis, and in particular post-Weavering, the decision from the Cayman courts, we see most managers employing professional independent directors, and many of them using split boards, which is using different independent directors from different service providers to enhance their governance process.”
  • The evolution of fund regulation: “Form PF, which is required under U.S. law for private fund managers, and Annex 4, which is required under [the Alternative Investment Fund Managers Directive], have resulted in significant information being provided to regulators regarding the private fund industry. That includes disclosures on the types of investors, assets under management, types of investments, use of leverage and derivatives, and geographical focus, among other data points…In addition, there are three tax reporting regimes now in place that are affecting the private fund industry: one from the U.S. (FACTA); one from the UK; and one that covers the rest of the world, which is called the Common Reporting Standard. I hope, at some point, that the UK will fold into the Common Reporting Standard to limit the number of tax compliance regimes, but that still remains to be seen.”

To read the full article, please click here.