Time was, hedge fund managers could treat their investors just one step above actual garbage. Oh, you want more clarity about how we value our investments? GTFO. You'd like to talk to Ken about the thesis behind one of our shorts? He'll get back to you between 12 and never and if you even think about calling this number again, you're done here. You need your money back? You can have it right after you ask your mother how my ass taste. You couldn't actually loan yourself $113 million from a gated investor fund and get away with it, but the climate was such that at least one guy though you could. Now, owing to new regulation as well some recent embarrassments, the Securities and Exchange Commission is warning managers to be nicer to clients or risk a time out.

Regulators are ramping up a new approach in policing the $3 trillion hedge-fund industry, focusing on how fairly managers treat their investors. The tack has emerged in a series of recent investigations into the way hedge funds value their thinly traded holdings and how they respond when investors ask for their money back. Those nuts-and-bolts issues used to be on the back burner for officials at the Securities and Exchange Commission, who didn’t have much oversight over hedge funds and didn’t prioritize the wealthy and sophisticated investors that invest in them. But such issues are getting more attention following setbacks in the courts for insider-trading probes that had commanded regulators’ time. In addition, the Dodd-Frank financial overhaul gave regulators a larger window into hedge funds’ inner workings, and they are now learning how to take advantage of it.

Of course, change doesn't happen overnight, so for now, how about just slightly better than the mix of crud and urine on the sole of your shoe?

Wall Street Cops to Hedge Funds: Treat Investors Better [WSJ]