Compliance for smaller hedge fund managers: view from Connecticut Lisa Snyderman

Consultant Lisa Snyderman shares her experience as an outsourced chief compliance officer (CCO), and a few tips for small and new fund managers.

Lisa Snyderman: The US Securities and Exchange Commission (SEC) rules have recently changed; hedge funds with regulatory assets under management exceeding $100 million have been required to register with the SEC since the Dodd-Frank Act. Now many of the hedge funds have to register and be audited by the SEC. So it's a new process for them.

There are two ways to file with the SEC for a new hedge fund. You can go through an attorney who will write your legal documents that are correct but not practical; or you have a compliance officer who does filings from beginning to end and does not charge as much as attorneys do.

Opalesque: What have you observed in your experience working with smaller fund managers?

Lisa Snyderman: I live in Stamford, Connecticut, and in this area there are a lot of small money managers.

What I am finding is that smaller firms don't really have the regulatory experience. Hiring somebody who has the experience can get very expensive, and a small firm might not need somebody full-time. As there are a number of consultants, myself included, who can be an outsourced CCO, a small firm can get somebody with a lot of experience for less money.

I also found that some of the smaller funds are really basic businesses, they just need somebody on an hourly basis to review their filings or update their procedures and help them with an SEC audit. The first time you go through it can be overwhelming and if by some chance two people give a different answer to the same question, you then run into trouble. The SEC regulators need to b......................

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This article was published in Opalesque's New Managers a top-down monthly analysis, news and research publication on the global emerging manager space.