Creating a self-regulatory organization for private fund advisers overseen by the SEC could help the agency provide better oversight of private equity and hedge fund advisers, but could also bring potential fragmentation among regulators, according to a GAO report issued Monday.
The report was triggered by the Dodd-Frank Wall Street Reform and Consumer Protection Act, which required private fund advisers managing $150 million or more to register with the SEC. It “is part of a longstanding effort to look at ways to help ease capacity constraints at SEC,” said A. Nicole Clowers, director of the Government Accountability Office's financial markets section and author of the report, in an interview.
Creating such an organization “is feasible but it is not without challenges and limitations,” Ms. Clowers said in the interview.
The report noted data from Hedge Fund Research that showed in 2010, 7,000 hedge funds managed $1.6 trillion in assets, compared with 3,300 hedge funds with about $490 billion in assets in 2000.