The Cost to Investors of the New SEC Rules

There has been quite a lot of material about the new SEC rules for the Private Fund industry. If you missed all the emails, webinars of which I am guilty of participating and missives – I applaud your ability to filter a lot of this noise.  Every law firm, compliance firm, audit firm, and administration firm are licking their chops because of the new fees these rules will generate for implementing these manager requirements. The only ones who should be upset are investors.  Investors should be extremely angry that the Commission which is supposed to be looking out for their best interest is costing them money and giving raises to service providers at the expense of their investments. The FT had a great piece on this today. Use this link to access.

My question is who does the SEC think is going to pay for all the costs associated with implementing the rules? Clearly, they don’t understand that investors, not managers pay the cost of running a fund. Perhaps they need a refresher course on fund operations and expense allocations. Expense ratios will increase, and performance will decrease once managers put in place these new requirements. To be clear some of these rules are good. Funds should be audited, and managers should be transparent about costs and fees, however, I would like to know which institutional or high net worth investors do not require this information during initial due diligence and ongoing monitoring of managers and funds.

Who doesn’t require quarterly statements of how THEIR investment is performing and annual audit? This is due diligence 101.  The SEC should be focused on fraud and catching the bad guys and girls who rob, cheat and steal from investors instead of giving the Private Fund industry service providers a raise.


First let me say, I apologize for the hiatus. The only thing I can do is echo Ferris’ comment that “life moves pretty fast if you don t stop and look around once in a while you could miss it.” I have been looking around. But I am back. Look for these posts on a more regular basis.

In the meantime, is it me or is coupon industry ramping up the amount of trash they are sending in the mail. It seems like the only mail I get these days are coupon books and flyers with discounts for things I don’t want or need. It is time to put a stop to this physical spam.