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Bailey McCann, Opalesque New York:

Proskauer has released its annual review for hedge fund and other private funds. The 135-page report is designed to be not only a recap of enforcement issues over the past year but a discussion of what private funds might expect in terms of regulatory concerns over the next year. Some of the more notable findings are highlighted below.

"We have designed the report to be a reference book that funds can look to for analysis of regulatory trends," says Robert Leonard, a partner in the Hedge Funds practice group at Proskauer and author of the review in an interview.

According to Leonard, the past year was defined - in part - by an increase in enforcement actions that involve private funds but also involve gatekeepers like fund administrators, lawyers, and others. This is a new evolution in how the SEC views service providers and one that Leonard says could have a "chilling effect" on what third-party companies are willing to offer the industry in terms of additional services.

The SEC's case against Apex Fund Servies in June, is an example of the increased scrutiny on service providers. In that case, the SEC settled with Apex for missing or ignoring clear indications of fraud while it was contracted to keep records and financial statements for funds managed by ClearPath Wealth Management and EquityStar Capital Management. Both companies were charged in a SEC enforcement action and the Commission opted to widen the scope of......................

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