Watchdogs begin to growl

Tue May 18, 2010

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Former SEC chairman Harvey Pitt talks to AsiaHedge editor Aradhna Dayal about the implications of the ongoing Goldman enforcement action and how an upcoming regulatory tsunami in the US will affect the Asia-Pacific hedge fund industry

We are already beginning to see reverberations in Asia due to the Goldman action brought by the SEC. What are the key implications for hedge funds?
HP There are a number of potential implications, in my opinion. First, firms engaged in packaging synthetic derivatives and similar transactions (including banks and hedge funds) need to review what they did and how they did it over the past couple of years, and satisfy themselves that they don’t have a Goldman-like problem on their hands or, if they do, to find solutions before regulators come knocking.

Second, these types of transactions require firms to have very effective risk management tools and personnel, and that will be the name of the game going forward. Firms will have to make sure they have high quality risk management processes, and consider all future transactions not just from a legal perspective, but also from the perspective...

ISSN: 2151-1845 / CDC10004H

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