Tags: SEC | Probes | Hedge | Funds | Side | Pockets

SEC Probes Hedge Funds' Use of 'Side Pockets'

Wednesday, 28 Apr 2010 10:21 AM

 

The Securities and Exchange Commission is taking a closer look at whether hedge fund managers abused a practice known as "side pockets" to prevent clients from withdrawing billions of dollars during the 2008 financial crisis, The Wall Street Journal reported.

Side-pockets are just one of several top priorities set by a newly created SEC enforcement unit focused on private equity, hedge fund and other asset managers, the paper reported, citing people familiar with the matter.

The unit also is looking into whether investment funds assign fair values to assets and accurately disclose information about their investment strategies, assets and performance, the paper reported.

The group had its first full staff meeting this week and has 60 attorneys across nine offices, the Journal reported.

Side pockets were widely used in 2008, when hedge funds faced a flood of withdrawal requests amid freefalling markets.

Fund managers, not wishing to sell their assets at fire-sale prices, barred clients from redeeming investments.

Many funds stashed illiquid securities into side pockets until markets improved, a move that reduced losses.

Yet many investors complained that fund managers abused the practice, did not disclose reasons for creating side pockets or disclose which assets were set aside.

SEC officials were not immediately available for comment.

© 2015 Thomson/Reuters. All rights reserved.

Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Robert Gates: US Has Unrealistic Goals on ISIS, Russia

Sunday, 01 Feb 2015 12:54 PM

Though the United States and its allies have made steps to control the Islamic State (ISIS), they are not winning the ba . . .

Illegals Could Wait Until 2019 to Have Cases Resolved

Sunday, 01 Feb 2015 11:13 AM

Thousands of immigrants seeking legalization through the U.S. court system have had their hearings canceled and are bein . . .

Christie Visits U.K. While Mulling Decision Whether to Run in 2016

Sunday, 01 Feb 2015 12:44 PM

With the 2016 presidential contest looming back home, New Jersey Governor Chris Christie is visiting the U.K. this week  . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved