Expert: Hedge Funds Unlikely To Be Thrilled By Rule Requiring Them To Rat Out Employees Engaging In Securities Fraud, Other Criminal Activities On Their Watch

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U.S. financial regulators are pushing to turn hedge funds into informers on the white collar crime beat. The Financial Crimes Enforcement Network (FinCEN) is working on a rule that would require U.S. hedge funds to file formal reports notifying U.S. authorities of any suspicious trading by employees or outside parties, the regulatory agency said. The rule being crafted by FinCEN, part of the Treasury Department, would force the $2 trillion hedge fund industry to police itself in much the same way banks, brokerages and mutual funds are required to do by filing suspicious activity reports (SARs) with the unit. Steve Hudak, a FinCEN spokesman, said a proposed rule for the hedge fund industry could be filed for public comment some time in the first half of this year. But the rule, which would cover activities such as insider trading and money laundering, will force funds to spend more money on building out their compliance and legal departments. Hedge fund lawyer Ron Geffner said he expects many in the industry will oppose the new rule as being both intrusive and costly. [Reuters via Dealbook, FINalternatives]

Comments (11)

  1. 1
    Posted by Ponzi | January 8, 2013 at 2:18 PM

    I'm putting all my money into USPS postage stamps………..

  2. 2
    Posted by guest | January 8, 2013 at 2:20 PM

    what?

  3. 3
    Posted by Khaki Clothes | January 8, 2013 at 2:36 PM

    That is the currency of choice among inmates of our federal prisons.

    -Guy who found that out because of a visit with a relative in a FMC.

  4. 4
    Posted by Grasso | January 8, 2013 at 2:41 PM

    I've got….two SNITCHES and a pair of dice!
    Pack your bags you'll be on ice!

    -FinCEN Money

  5. 5
    Posted by livingthedream | January 8, 2013 at 3:16 PM

    these should be called rico laws for hedge funds….

  6. 6
    Posted by segoviacobain | January 8, 2013 at 4:00 PM

    I thought booty was the currency of choice. What do I know?

  7. 7
    Posted by Guest | January 8, 2013 at 4:08 PM

    or just rename them rajaratnam laws

  8. 8
    Posted by Guest | January 8, 2013 at 4:17 PM

    If rewards will be handed out, SAC employees could find this an interesting way to leave.

  9. 9
    Posted by Guest | January 8, 2013 at 4:23 PM

    Then a Pitney Bowes mailstation would be the equivalent of the Fed printing press?

  10. 10
    Posted by Guest | January 8, 2013 at 4:31 PM

    So…. then…

    Fired with a Bonus:Golden Parachute::Quitting with Immunity:Soiled Diaper?

  11. 11
    Posted by sohbet | May 12, 2013 at 6:35 PM

    telling these little stories, here's a good idea: Have a point. It makes it so much more interesting for the listener.