High Risk Hedge Funds Draw SEC Scrutiny

Law360, New York (January 30, 2006, 12:00 AM EST) -- Hedge funds that are classified as high risk will come under government scrutiny every three years, as the Securities and Exchange Commission’s controversial rule governing hedge fund managers goes into effect this week.

The SEC will determine the risk factor of a firm using two evaluation tools, said SEC spokesman John Heine.

Once a year the information that is included in one of the forms for advisers is fed into a risk assessment algorithm and on the basis of that process firms are scored as high...
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