San Diego Daily Transcript – When an adviser, consultant or broker recommends a hedge fund or fund of funds, he or she may not be pitching the best investment for you because there’s a commission at stake.
Except for broker-dealer suitability rules and modest disclosure of conflicts, the hedge fund industry is largely unpoliced, so few know the extent of this problem.
Of the more than 8,000 funds in the $1.2 trillion business, only 2,456 have registered with the U.S. Securities and Exchange Commission as of April 30, the agency reported. That means the majority of the industry is not being watched by the chief securities regulator.
With a U.S. appeals court ruling on Friday that the SEC doesn’t have the power to regulate these vehicles, the agency’s authority would be even weaker, unless the ruling is overturned.
