Hedge funds face tougher regulatory scrutiny after the Financial Services Authority found a “disappointing” lack of controls among some industry firms and a complacency towards risk. Financial times, The Times, The Daily Telegraph, The Independent
The FSA is to expand its visits to a wider range of hedge fund managers to assess formally the controls in place to prevent market abuse and insider trading.
The regulator warned it would judge hedge fund managers against a template of standards to combat insider trading on issues such as staff training, dissemination of information, maintaining data on transactions and recording telephone calls.
The warning came after the FSA uncovered poor systems during visits to a cross-section of hedge fund managers. The FSA said: “Some hedge fund managers had a high level of awareness and appropriate controls in place, others were less aware, had few controls and demonstrated a complacent attitude to the risks. We are disappointed by some of what we saw.”
Mike Duignan, manager of the FSA market conduct monitoring team, said: “Every firm visited had something it could improve on.”