Manny Roman, a leading figure within the hedge fund industry recently highlighted the need for tighter regulation of the hedge fund industry within the US, in order to avoid future scandals.
Nicola Smith, CEO of fund administrator, Helvetic commented:
“In 2008 the collapse of the financial sector and the discovery of the Madoff scandal triggered a worldwide sell-off of risk assets which brought financial markets to the brink of a meltdown. The blame was quickly placed at the foot of the financial markets, most notably hedge funds who took advantage of light regulations allowing them to engage in highly speculative transactions through opaque structures.
“At the time, the hedge fund industry was placed under severe public scrutiny leading to a change in the landscape, particularly in the UK, with the launch of the AIFM Directive.
“While strides have been made in the UK and Europe, question marks still remain regarding the procedures put in place in the US.
“The implementation of initiatives such as Dodd Frank may notably have a positive impact on the hedge fund industry; however, concerns have already been raised by senior figureheads stating that this will bring over-regulation therefore going against the nature of what a hedge fund is. Have the lessons of 2008 and Madoff not been learnt?
“This is where third-party fund administrators can make a huge difference. The role of the third-party fund administrators is to essentially protect the interests of the investor.
“One of the most startling realisations to come out of the Madoff scandal was that Bernie Madoff had been allowed to conduct his own fund administration, and custody of the assets too, meaning his investors were not aware of what was actually going on with their investments. What’s probably even more startling is that in the US, the practice of self-administration is not uncommon. Unless efforts are made to re-address the current regulations in-place and instil the need for mandatory third-party administration, it is almost a given that incidents like this will occur again.”
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Notes to Editors
Helvetic Fund Administration Ltd (‘the Company’ or ‘Helvetic’) is a company with a clear vision of the future for fund administration. Helvetic has operated in Gibraltar since 1998 growing to become the largest operation of its type on the peninsular. It is regulated by the Gibraltar Financial Services Commission (FSC) and as the first fund administration company in Gibraltar, Helvetic was licensed by the FSC with the introduction of a licensing regime for the fund administration industry in Gibraltar.
The company has extensive experience in supporting sophisticated hedge fund structures and investment vehicles. Helvetic focuses on maintaining a close working relationship with its clients in order to provide them with services superior in quality, efficiency and responsiveness.
For more information, please see: http://www.helveticfund.com/
Spreckley Partners Ltd,
Tel: +44 (0)207 388 9988