The SEC is adding private fund expertise to its examination team.
SEC officials said Monday the Office of Compliance Inspections and Examinations created a special unit within the division to focus on private equity and hedge funds.
The unit will be co-chaired by Marc Wyatt and Igor Rozenblit. Before joining the Securities and Exchange Commission in 2012 as a senior specialized examiner, Mr. Wyatt was a partner and senior portfolio manager at Stark Investments in London. Mr. Rozenblit has worked in the SEC's enforcement division and several private equity firms.
“That is really going to help them hone their examination process,” said Steven Nadel, a partner in law firm Seward & Kissel, who expects the focus to be on how expenses are allocated and fees are disclosed to clients.
In 2010, private funds were required to register with the agency by Dodd-Frank Wall Street Reform and Consumer Protection Act. Since then, the SEC has added a specialized asset management unit to its enforcement division and brought in more industry experts to the investment management division.
“The fact they are really looking to make sure that they understand what they are regulating is a good sign,” said Mitch Ackles, president of the Hedge Fund Association. “Ultimately, it is going to be dependent on how much time and care (OCIE examiners) take.”
David Vaughan, a partner with law firm Dechert who works with hedge funds and private equity firms, said that concentrated expertise can make exams more efficient and effective. “It also helps on the exam side to make things as consistent as possible, so that it is the same in Boston as it is in New York,” Mr. Vaughan said.
One private equity industry source, who declined to be identified, worried that, while “there are a lot of people striving to learn more, I think they have a ways to go. OCIE should be very careful and cautious about how they proceed.”
