Kaal claims by topic: disclosure

314 atomic, individually citable claims from the published work of Wulf A. Kaal tagged disclosure.

The hedge fund fee structure creates very strong financial incentives for managers to hide weak performance through valuation. 2009
Moral hazard is worsened when the financial products traded are so complex that the agents, mostly on the buy side, do not entirely understand them and trade for the principal on the basis of incomplete and asymmetric information. 2009
More disclosure does not always mean better governance, because the information provided may be hard to assess and evaluate. 2009
Mandatory risk disclosure to the SEC would probably fail on staffing grounds, because professionals capable of understanding hedge fund risk data would be disincentivized to use that knowledge for supervision rather than economic gain, finding the private sector far more lucrative. 2009
Requiring hedge funds to supply risk and valuation data in a simplified format would in fact impose a significant burden on the industry, since simplification requirements would raise transaction costs, require pre-screening, and possibly additional staff. 2009
Regulation targeted only at retail investors is misdirected, because incomplete and asymmetric information, bounded rationality, and moral hazard make it difficult even for professional and semi professional investors to discern the characteristics of highly complex instruments and hard-to-value assets. 2009
Foreign cubed cases in US courts rose over the decade preceding 2010, and in 2008 the number of such cases exceeded any previous year. 2010
Legal uncertainty generates transaction costs, and European company boards will inevitably incur costs minimizing the information asymmetries created by different legal regimes that may or may not apply to their company. 2010
If US law requires disclosure of information that another country's law prohibits from being disclosed, whether for privacy or other reasons, there could be a true conflict of law and a credible case that the United States is in breach of international law. 2010
German banks' exposure to CDO risk ran through credit enhancement and liquidity guarantees given to off balance sheet conduits, and because that exposure was often kept out of their accounting the inherent risk only surfaced once the CDO market collapsed. 2010
The U.S. governance structure, built on periodic disclosure of performance data and stock price maximization, encourages risk taking because managers feel compelled to meet shareholder expectations at every reporting interval. 2010
Director independence does not produce effective risk monitoring: as the failure of independent director oversight at Lehman Brothers and other large U.S. financial firms shows, independent directors cannot monitor risk when managers, accountants and lawyers keep them in the dark. 2010
The EU's Market Abuse, Transparency, Markets in Financial Instruments and Prospectus Directives improved European securities regulation but still do not mandate coherent and comprehensive disclosure, leaving issuers free to disclose in disparate ways. 2010
Routine engagement in highly complex transactions lets public companies conceal risky transactions from investors and even from their own directors, which is a structural weakness in the supposedly rigorous U.S. disclosure regime. 2010
The more a country leads in financial innovation, the more exposed its disclosure regime is to misrepresentation and fraud, which makes the U.S. regime more vulnerable than Germany's despite being formally stricter. 2010
The United States compensates for its lenient corporate law treatment of risk taking under the business judgment rule with a comparatively strict disclosure regime and a robust securities class action litigation regime; substantive corporate law pushes the monitoring requirement toward leniency while securities enforcement pushes it back toward stringency. 2010
In the United States the duty to disclose risk indirectly generates risk monitoring, because directors who know they are responsible for disclosing risk have reason to monitor it even though corporate law imposes no explicit duty to monitor. 2010
The U.S. approach left both of its risk controls ineffective: the securities disclosure regime failed to prevent the 2008 financial crisis, while the expansive business judgment rule that permitted the risk taking in the first place survived the crisis unchanged. 2010
Delaware courts have not explicitly imposed a duty to monitor risk, but that omission may be moot: because failing to disclose risk violates federal securities law, unmonitored risk is likely to become undisclosed risk and therefore actionable. 2010
Contingent capital offers only limited protection against information asymmetries, principal and agent conflicts, and collective action problems, so it cannot by itself prevent economic failure. 2011
Existing proposals for implementing contingent capital do not explain how they would address the information asymmetries and principal and agent problems that may lie at the core of the credit crisis. 2011
Information asymmetries between market participants and a systemically important institution's management before default can be reduced if a financial weakening after conversion of contingent capital triggers a voting rights increase. 2011
Because the Bankruptcy Code does not define adequate information, prepackaged plans risk inadequate disclosure, creditor challenge, and unusable prepetition votes that force the case into the longer ordinary Chapter 11 confirmation procedure. 2011
Regulators who obtain hedge funds' proprietary information could inadvertently pass it to third parties, and because that information is highly valuable to competitors in the same markets, such leakage could undermine trading strategies and the long-term viability of hedge funds. 2011
Because hedge fund trading strategies depend on confidentiality, required disclosures that let other market participants trade along or anticipate a fund's transactions can negatively affect the fund's absolute returns. 2011
Registering hedge funds with regulators and requiring disclosure of pertinent information could help minimize the moral hazard, social externalities, and systemic risk generated by the hedge fund industry. 2011
Article 13 of the Swiss Banking Act, which authorizes boards of systemically important banks to issue mandatory convertible bonds subject to disclosure of the conversion triggering event and permits tranches with multiple triggers, could serve as a model for other European legislators and for the United States legislator. 2012
Freedom from supervision and disclosure obligations was functional rather than incidental for hedge funds: it enabled successful fund launches, helped generate higher returns, and attracted investors, which is why manager registration is contested. 2012
Under the Private Fund Investment Advisers Registration Act, hedge funds with more than $150 million in assets under management must register as investment advisers and disclose information about their trades and portfolios to the SEC, making assets under management the operative trigger for the regime. 2012
Revised Form ADV requires advisers to report gross rather than net regulatory assets under management and narrows their discretion to include or exclude assets, so the registration threshold becomes harder to manage down through reporting choices. 2012
Form PF reporting achieves broad coverage of systemic exposure with narrow coverage of firms: the SEC expects the small set of large filers to account for eighty percent of total hedge fund assets under management in the United States. 2012
Quarterly rather than annual Form PF updating for large hedge fund advisers is designed for timeliness: its purpose is to give the Financial Stability Oversight Council data current enough to identify emerging trends in systemic risk. 2012
The hedge fund industry's concern with confidentiality and privacy is itself an obstacle to empirical research: it made obtaining a substantial effective sample size for this study difficult, independent of the survey design. 2012
Mandated disclosure does not automatically produce usable public data: although Form ADV requires advisers to disclose chief compliance officer contact information, the SEC dataset omitted it and contained no e-mail addresses, so researchers could not reach the officers responsible for compliance. 2012
The Form PF quarterly reporting threshold of $1.5 billion in assets under management is not a binding sizing constraint for most advisers: 80.46% would not take it into account in determining fund size, while 19.54% would. 2012
Mandatory reporting does not guarantee informative reporting: anecdotal evidence indicates that advisers can present the information required in Forms ADV and PF in ways that in effect flatten out and sanitize the disclosures. 2012
If advisers sanitize their Form ADV and Form PF filings, the disclosures become less useful for FSOC and SEC evaluation and undermine the very determination of systemic risk posed by private funds that the reporting regime was built to enable. 2012
Rather than banning purchases by systemically important institutions of each other's contingent capital, which could be detrimental to market evolution, the design should require disclosure of the purchaser's identity and approval by the issuer. 2012
Directors who are inadequately informed about the expected standard of conduct will underestimate their personal liability exposure and engage in riskier behavior than is desirable for the company itself. 2013
Private rulemakers have a comparative advantage over public rulemakers in the dynamic regulation framework because public rulemakers lack comparable access to timely and institution-specific information. 2013
There is a substantial overlap between the systemic risk disclosure requirements imposed on hedge fund advisers under Title IV of the Dodd-Frank Act and the disclosure requirements under the fully revised version of Bankruptcy Rule 2019. 2013
Under the regulatory framework in place at the time of writing, the threat that hedge funds' systemic risk filings could be publicly disclosed through the bankruptcy process will affect hedge funds' tactics and their role in distressed investing only marginally. 2013
Under Revised Rule 2019, parties acting in concert must disclose not only equity holdings and claims but also derivative instruments such as swaps, options, and short positions. 2013
The threat of systemic risk disclosure, combined with rising competition in the distressed-debt market, could further incentivize hedge fund managers to cooperate in the bankruptcy process. 2013
The SEC has not standardized the disclosures required in Form PF, and there is evidence that Form PF requirements rest on an inconsistent use of industry terms, which can in turn produce inconsistent and contradictory data reporting. 2013
Creditors and shareholders in bankruptcy, unlike debtors, are typically not required to disclose their interests until they participate in the case by filing a proof of interest or claim and seeking to be heard by a judge. 2013
Because creditor disclosure obligations in bankruptcy are minimal and a general statement of the type of claim often suffices, hedge funds' penchant for secrecy carries over into the bankruptcy process even when they participate as debt holders. 2013
Revised Rule 2019 clarifies some of the ambiguities of the old rule, but uncertainty and confusion about its application remain inevitable. 2013
The scope of Revised Rule 2019 is broader than that of the old rule because it triggers disclosure for committees, entities, and groups that are acting in concert to advance common interests and that are not composed entirely of affiliates or insiders of one another. 2013
The definition of representation in Revised Rule 2019 leaves it unclear whether attorneys who merely monitor a bankruptcy case for a client, without soliciting or advocating a position before the court, represent those clients for disclosure purposes. 2013
The central compromise in Revised Rule 2019 is that parties need not disclose the price or the date of acquisition of disclosable economic interests, which is precisely the outcome the hedge fund industry lobbied for. 2013
Systemic risk reports filed by registered investment advisers are confidential and are not publicly available, so any effect of these filings on bankruptcy practice depends on the prospect of disclosure rather than on actual public access. 2013
Mandatory quarterly Form PF reporting for large hedge fund advisers is designed to give the Financial Stability Oversight Council timely data for identifying emerging systemic risk trends and to align United States practice with international trends. 2013
Bankruptcy and systemic risk disclosure obligations for hedge funds have different origins and serve different purposes: bankruptcy disclosure is meant to level the playing field in the restructuring process, while systemic risk disclosure is meant to help regulators detect and prevent systemic consequences. 2013
Under both the bankruptcy and the systemic risk disclosure regimes, filed data carries a serious risk of being out of date and less accurate at the time it is analyzed than when it was disclosed, partly because of the lag needed to collect data before filing. 2013
Form PF's required disclosure of a reporting fund's strategies includes a separate subcategory for event driven, distressed and restructuring strategies, which is what makes the form potentially relevant to bankruptcy proceedings. 2013
Revised Rule 2019 may in effect produce less overall disclosure of creditor activities in the bankruptcy process and push bankruptcy creditors into the shadows, the opposite of the transparency the revision sought. 2013
The overlap between hedge fund adviser disclosures under Revised Rule 2019 and systemic risk disclosures under Form PF, combined with the uncertainties Revised Rule 2019 created, points to a possible future role for systemic risk disclosures in bankruptcy. 2013
Form PF disclosures in their existing format are too generic to be appropriately applied in bankruptcy, but accumulated experience with the form and standardization of its items could yield less generic disclosures that become increasingly relevant to bankruptcy over time. 2013
The threat that hedge fund managers' systemic risk filings could be publicly disclosed could help incentivize hedge fund investors to abstain from trading while serving on a creditors' committee and to avoid holding multiple offsetting positions in distressed entities. 2013
Disclosing otherwise private and proprietary Form PF systemic risk data exclusively to bankruptcy judges could alleviate the hedge fund industry's concerns about privacy and about the reverse engineering of its strategies and positions. 2013
Restricting Form PF data to the eyes of the bankruptcy judge alone would create problems in the litigation process, because opposing parties may demand access to the same information. 2013
Because systemic risk disclosures are far more generic and are not tailored to any specific distressed investment, importing them into bankruptcy would improve only marginally the information available about the motives of distressed securities investors. 2013
Systemic risk disclosures in the bankruptcy process would also not significantly change or limit hedge funds' influence in that process, nor would they protect against the misuse of confidential information. 2013
Increased disclosure obligations let so-called pilot fish emulate hedge funds' investment strategies and positions, which makes those positions more expensive to build and strips systematic bargaining strength from the negotiation process. 2013
There is a real risk that increased disclosure through Form PF would destroy the balance of power in the restructuring process. 2013
Public access to hedge fund managers' systemic risk disclosures under the Dodd-Frank Act and the SEC implementation rules could improve hedge funds' distressed investments and their bankruptcy practices. 2013
Title IV and the SEC forms use assets under management as a proxy for systemic threat, so that disclosure obligations scale upward with the size of the hedge fund adviser. 2013
Registration is the gateway that makes data collection and enhanced disclosure by hedge fund managers possible, and the Dodd-Frank Act raised disclosure requirements for registered advisers specifically to address systemic risk concerns. 2013
Part 2 of Form ADV requires a plain English narrative brochure for prospective advisory customers, making the brochure the primary disclosure document delivered to an adviser's clients. 2013
Form PF filings, unlike Form ADV filings, are confidential and not publicly available, so the systemic risk disclosure regime is built for regulators rather than for market or investor scrutiny. 2013
The frequency of Form PF reporting is keyed to size: advisers with at least $1.5 billion RAUM attributable to hedge funds must update quarterly, while advisers below that level file only annually. 2013
Quarterly rather than annual reporting by large private fund advisers is intended to give the FSOC data timely enough to identify emerging systemic risk trends. 2013
Referral fees to third parties are permitted only if the recipients are bona fide persons under securities laws, the fees are disclosed to the adviser's clients, and the fees are paid under a written agreement. 2013
CIAs reach into the day to day compliance operations of corporations by elevating the chief compliance officer, typically mandating the appointment of a CCO who reports directly to the CEO rather than to the general counsel or chief financial officer and who has direct access to the board. 2013
Codes of conduct adopted under a CIA should encourage disclosure of compliance issues and protect whistle blowers from retaliation by maintaining the anonymity of disclosures. 2013
The additional CIA requirements, and especially the self-reporting provisions, force companies to spend additional resources and at times to alter their day to day operations after signing. 2013
CIA provisions create economic incentives that affect directors' diligence, because stipulated daily noncompliance penalties stacked on top of monetary penalties under federal health laws expose companies that executed CIAs to significant financial ramifications. 2013
Contrary to the hedge fund industry's claim that increased supervision and disclosure would harm profitability, the authors find statistical evidence that the Dodd-Frank Act requirements had a positive effect on hedge fund performance. 2014
The quarterly Form PF reporting obligation imposed on hedge fund advisers with more than $1.5 billion in regulatory assets under management is designed to give the FSOC timely data for identifying systemic risk trends. 2014
Hedge fund advisers with very small AUM likely did not respond to the Dodd-Frank Act registration requirement because they anticipated that disclosure would remain voluntary for them. 2014
The SEC's collection of proprietary hedge fund data through Forms ADV and PF does not negatively affect the performance of the hedge fund industry as a whole, and appears to affect only a subset of the industry. 2014
Governmental contracts generate multilevel feedback processes across a sequence of stages: corporate self investigation, self reporting, preemptive remedial measures, negotiation, continuing wrongdoing, and execution of the contract. 2014
Self reporting supplies institution specific information from which the government can identify governance shortcomings in the reporting entity and draw conclusions about regulatory needs across the entity's industry. 2014
The Form PF filing obligation is triggered by a bright line asset threshold: every registered investment adviser with more than $150 million in assets under management attributable to private funds at the end of its most recently completed fiscal year must file. 2014
Form PF's counterparty credit exposure requirement is difficult to satisfy at the source, because the exposure is highly sensitive information that individual fund managers often cannot readily determine. 2014
Prior scholarship, including the author's own earlier work, established that Form PF created core challenges for the private fund industry but did not clarify what impact the disclosure requirements actually have on managers; this study is designed to fill that gap. 2014
The Form PF burden is concentrated in a few identifiable items: respondents ranked Question 16 on types of investors as the most time consuming, followed by Question 17 on performance and Question 7 on related persons. 2014
Complaints about Form PF's ambiguity coexist with acceptance of its substance: the same majority that flagged ambiguity as the most pressing issue also considered their existing reporting systems adequate and agreed with the SEC's definitions and instructions. 2014
Where SEC guidance failed, the failure was localized: respondents who found guidance inadequate pointed predominantly to Form PF Section 1c, Item B, which concerns information about the reporting fund. 2014
Most private fund advisers did not need new infrastructure to comply: 65.22 percent reported that their existing internal reporting systems adequately capture the information Form PF requires. 2014
For a substantial minority, existing systems fail Form PF for a specific reason: 34.78 percent of respondents said their internal reporting systems were insufficient because the required answers demand further analysis and calculation beyond what the systems already produce. 2014
Investor demand for Form PF filings is limited: 74.47 percent of respondents had never been asked by an investor for a copy of their Form PF filing. 2014
Form PF fund performance metrics are not accurate or comparable across filers, because reporting entities employ different calculation methodologies to produce them. 2014
The governance trends reported in this study apply only to corporations that actually executed an agreement, so because a disproportionately large number of corporations self correct or self report instead, the findings may capture only the tip of the iceberg. 2014
The new regulatory framework for private funds in the United States requires hedge fund manager registration in combination with enhanced disclosure of sensitive proprietary information, a combination that marks a shift in how private funds are regulated. 2014
Title IV mandates hedge fund adviser registration in order to increase record keeping and disclosure, requiring advisers above the statutory AUM threshold to register as investment advisers and to disclose information about their trades and portfolios to the SEC. 2014
Registered investment advisers must report systemic risk relevant information to the SEC, including trading practices, trading and investment positions, the amount of assets under management, valuation policies, and side letters. 2014
Form PF is structured so that single strategy fund advisers collect and provide only a fraction of the information a multi strategy adviser must make available, which makes reporting burden a function of strategy count rather than of adviser size. 2014
Because Form PF requires less information from single strategy advisers, hedge fund advisers that apply only a single strategy to their portfolios may incur overall lower compliance cost. 2014
Even though the private fund industry broadly accepted Form PF, the form's core problems for the SEC are the ambiguity of several questions, advisers' disagreement with the definition of funds, and correspondingly insufficient SEC guidance. 2014
Form PF data was tailored primarily for the FSOC rather than for the SEC's own purposes, a design choice that shaped the level of reporting required. 2014
The SEC itself reports that the consistency of investment advisers' responses on Form PF is not ensured and may be questionable. 2014
The SEC's initial analysis of Form PF data turned up anomalies attributed to filer error, which prompted SEC concern about the quality of the information private fund advisers report. 2014
Expanding the uses of Form PF data remains difficult so long as there is insufficient confidence in the accuracy of what advisers report, notwithstanding SEC efforts to improve quality through interpretive FAQs and curative amendments. 2014
Form PF data quality and utility are likely to improve over time as filers grow familiar with the form's requirements and calculation methods, because the SEC's experience with the data is still early. 2014
The Form PF definition of Regulatory Assets under Management is the leading example of a definition that forced filers to interpret what they were required to report. 2014
The interpretation Form PF demands generated particular concern among filers about the definition of counterparties and about counterparty performance measures. 2014
Widespread filer disagreement with Form PF definitions implies that a large share of filers are uncertain how to answer, which raises the possibility that they complete the form with estimates and varied assumptions. 2014
Private fund advisers reporting under Form PF encountered issues that could affect the FSOC's systemic risk assessment, but the author does not claim that the FSOC is unable to fulfill its congressional mandate. 2014
The DOJ announcement is the only ascertainable point at which the market can assess the impact of the governance changes an N/DPA mandates, because the announcement typically accompanies release of the agreement document itself. 2015
Mandatory registration and increased disclosure for certain hedge fund advisers under the Dodd-Frank Act place hedge fund advisers under registration and reporting obligations similar to those long borne by mutual fund advisers. 2016
Private party litigation against hedge fund managers stays minimal because well counseled managers make extensive disclosures to investors who are presumed sophisticated, unlike mutual fund advisers who face ongoing high value investor suits. 2016
For the first time in the industry's history, the Dodd-Frank Act required most hedge fund advisers to register with the SEC, mandating disclosure of information previously treated as proprietary and private. 2016
Dodd-Frank Act compliance costs fall most heavily on advisers managing the largest number of reporting funds, because private fund advisers incur roughly $10,000 in compliance cost per reporting fund. 2016
A third channel is measurement rather than economics: if regulation curbs misreporting, private fund advisers' performance would appear to decrease simply because managers are less able to inflate their monthly returns. 2016
The quarterly Form PF reporting obligation imposed on advisers with more than $1.5 billion in regulatory assets under management attributable to private funds exists to give the FSOC timely data for identifying trends in systemic risk. 2016
The absence of any statistically significant effect of mandatory disclosure on hedge fund returns suggests that the transparency costs associated with disclosure do not significantly affect the profitability of hedge fund advisers. 2016
To sharpen assignment to treatment and control, actual registration histories were pulled from the SEC's IAPD website and historical Form ADV data and combined with Morningstar variables to build two additional control groups: firms already registered with no status change, and foreign firms completely unaffected by the US legal regime. 2016
For much of its history the private fund industry has treated adviser registration and disclosure of proprietary information as a threat to its profitability, a view this study's evidence does not support. 2016
Regulators face a two ended timing trap: at the early stage of an innovation they lack information about its possible impact, and at the later stage the innovation is entrenched, so regulatory change becomes far more costly for innovating corporations. 2016
Early regulatory intervention is subject to massive information asymmetries and associated regulatory uncertainty because the early stage of an innovation often provides insufficient information about its possible risks and benefits. 2016
Early regulatory intervention becomes unnecessary in a dynamic regulatory framework, because the regulatory challenges associated with innovation would become transparent in real time through improved, decentralized information and feedback effects. 2016
Dynamic regulatory mechanisms avoid legal uncertainty better than principles based regulation because in the dynamic framework rulemaking follows feedback processes that are transparent to both the affected industries and the regulators. 2016
The opacity of the hedge fund shadow banking system blocks direct measurement of hedge funds' role in the crisis, leaving researchers with indirect measures extracted from existing data rather than primary pre-crisis sources. 2016
Pre-crisis regulatory attention was misallocated: although Bernanke identified failure to manage counterparty risk as the primary cause for concern, the SEC and the Senate Banking Committee concentrated on hedge fund transparency instead. 2016
Title IV of the Dodd-Frank Act addresses alleged hedge fund systemic risk through an information strategy rather than a substantive one: it authorized the SEC to require registration and enhanced disclosure from private fund advisers and to facilitate data collection for assessing systemic risk. 2016
Before the financial crisis of 2008 to 2009, the standard AIMA and MFA due diligence questionnaire templates were often deployed defensively: managers used the old versions to steer investors away from questions that would have exposed weaknesses in the managers' controls. 2016
Because a material omission or misstatement in Form ADV Part 2A can support a serious securities law charge, private fund managers have an incentive to keep the narrative language of that required disclosure as high level, summary, and non committal as possible. 2016
From 2007 to 2014 an increasing number of Form ADV Part II filers deemed investor due diligence worth mentioning, and an increasing number of filers qualitatively increased their due diligence disclosures in the brochure filings. 2016
Since 2010 an increasing number of SEC Form ADV Part II brochure filers included investor due diligence disclosures, but the number of filers including such disclosures remained relatively even between 2012 and 2014. 2016
The intensity of due diligence mentioning relative to total Form ADV Part II brochure filings increased substantially, and the due diligence count exceeded the total number of ADV II filings for the first time in 2014. 2016
Form ADV Part II filings jumped from 3,024 in 2010 to 21,685 in 2011, and that jump was accompanied by a corresponding increase both in the number of filings mentioning investor due diligence and in the due diligence counts within those filings. 2016
Although overall Form ADV Part II filings fell between 2012 and 2013, due diligence counts fell only marginally, from 20,828 to 20,031, and filings mentioning due diligence fell from 7,862 to 7,198, less than proportionally to the drop in total filings. 2016
Advertising an elaborate multi limb due diligence process is no evidence that it was applied: Madoff's asset management advisers FIM Limited and FIM Advisers touted what sounded like above industry standards yet applied none of them to Madoff's firm and admitted as much. 2016
The collapse of Long Term Capital Management in 1998 and its Federal Reserve orchestrated bailout made hedge fund risk to international markets apparent, and concerns over excessive leverage combined with a lack of transparency drove the demand for new regulation. 2016
Under Title IV of the Dodd-Frank Act, hedge funds with more than $150 million in assets under management must register as investment advisers and disclose information about their trades and portfolios to the SEC. 2016
Some of the most sensitive Form PF disclosures are not readily obtainable by the funds themselves: counterparty credit exposure often cannot be determined by individual fund managers, which makes the reporting requirement burdensome in practice. 2016
Larger hedge fund advisers, which must file Form PF quarterly rather than annually, faced substantially higher compliance costs for both initial and subsequent reporting than smaller advisers did. 2016
The most pressing problem with Form PF identified by the majority of SEC registered hedge fund advisers is not the volume of data but the ambiguity of the data reporting requirements themselves. 2016
Co-investment arrangements become problematic when a fund grants a co-investment opportunity in exchange for a future or increased fund commitment and the practice is not adequately disclosed, especially where the fund's governing documents would prohibit the allocation. 2016
Neither obvious remedy for the increased sales pressure created by the Rule 506 amendment works well: added disclosure obligations such as filing all Rule 506 sales documents with FINRA or the SEC may burden issuers inappropriately, while litigation based enforcement may not reach all offenders equally or appropriately. 2016
A system in which hedge funds submit position information to an authority that aggregates and publishes it cannot address liquidity risk, because protecting proprietary information requires so much aggregation that the resulting information loses value to market participants. 2016
A public database of nonproprietary hedge fund information might demystify the industry, but it would not address the central policy concern that opacity creates liquidity risk. 2016
SEC rules should be amended to require public companies, particularly financial institutions, to disclose their material exposure to hedge funds and other highly leveraged institutions in the MD&A or Description of Business sections, which would be consistent with existing SEC disclosure philosophy. 2016
The reporting obligations imposed on private fund advisers by Form PF raised regulatory oversight of private funds to unprecedented levels. 2016
Sensitivity to the Form PF quarterly reporting threshold rose sharply: only 19 percent of 2012 respondents took the $1.5 billion threshold into account, compared with 33 percent in 2015. 2016
Because quarterly Form PF filing costs roughly $10,000 per reporting fund, the $1.5 billion threshold that triggers quarterly filing gives advisers a direct cost reason to factor that threshold into the AUM decision. 2016
Form PF raised regulatory oversight of private funds to unprecedented levels by requiring managers to disclose, for the first time, information about themselves, their funds, their investors, performance, financing, risk metrics, strategies, and credit exposure. 2016
Prior studies acknowledge that the SEC's mandated collection of private fund data through Form PF created several core challenges for the industry, but they do not sufficiently clarify the long-term impact of the Form PF disclosure requirements. 2016
Form PF required disclosures of counterparty credit exposure constitute sensitive information that individual fund managers often cannot readily determine, which makes that reporting requirement hard to satisfy. 2016
A 2013 survey found that Form PF compliance costs for first time filers were under $10,000 for 59.18 percent of respondents, while subsequent annual Form PF filings cost no more than $5,000 for 57.14 percent of respondents. 2016
The largest group of respondents prefers an assets under management size between $500 million and $1 billion, and no clear majority preference emerges around the $1.5 billion Form PF quarterly reporting threshold. 2016
A majority of adviser respondents, 66.7 percent, did not take the $1.5 billion Form PF quarterly reporting threshold into account when determining the appropriate assets under management for the funds they manage. 2016
Post-crisis legislation accelerated the convergence of mutual funds and private funds, because the registration and increased disclosure requirements the Dodd-Frank Act imposed on certain private fund advisers subject them to substantively the same obligations that apply to advisers of mutual funds. 2016
The complexity of unconstrained mutual fund trading has grown to the point that even leading professional analysts struggle to assess these funds' portfolios and their performance. 2016
The go anywhere features of unconstrained mutual funds impede a retail investor's ability to ascertain and understand what the fund is invested in and what risks those investments carry. 2016
Reliance on prospectuses and other disclosures by an unconstrained mutual fund that in all material respects complies with the Company Act may be insufficient to protect retail investors. 2016
It is questionable whether retail investors typically have the experience or training to fully appreciate the risks disclosed in unconstrained mutual fund prospectuses. 2016
The broad investment authority of unconstrained mutual fund managers exposes retail investors to fluid trading and investing patterns that the average retail investor is unlikely to sufficiently appreciate, regardless of the nature and quantum of disclosure, so additional disclosure cannot close the gap. 2016
Because an unconstrained mutual fund's performance is typically not assessed against any established benchmark, the retail investor must evaluate the fund without the contextual information routinely available for mutual funds pursuing more traditional credit strategies. 2016
The SEC should re-evaluate its reliance on the Company Act's disclosure regime in its current form as the best means of protecting retail investors from the risks of investing in unconstrained mutual funds. 2016
The SEC continues to rely on disclosure as the means of mitigating investor risk from unconstrained and other mutual funds irrespective of the complexity of those funds' portfolios and strategies. 2016
The absence of any current requirement to present unconstrained portfolio risks in detail raises the question whether unconstrained mutual fund prospectuses provide the adequate, accurate, and explicit information required by Section 1(b)(1) of the Company Act. 2016
The current legal and administrative processes that support private equity are time consuming, expensive, lack transparency, and involve lengthy, duplicative, and fragmented investment and administrative processes. 2017
Blockchain based fund reporting substitutes verifiable transparency for hedge fund secrecy: the LendingRobot ledger shows detailed holdings and supplies a hash code signature as evidence that the data is tamper proof. 2017
Making the blockchain enabled per transaction fee publicly available lets a private fund adviser set the applicable fee against a competitive market, so that investors in transaction heavy strategies agree upfront to higher fees. 2017
Increased transparency from blockchain recordkeeping lowers fees by allowing a fund to expend fewer resources on auditing itself. 2017
Cryptocurrency gains are massively underreported to the IRS: despite Bitcoin rising from under twenty dollars in 2013 to over twelve hundred dollars in 2017, the IRS received only around 900 Form 8949 filings indicating crypto gain or loss over four years. 2017
Blockchain removes the reconciliation problem in private equity administration by letting every party to a deal view a single compiled version of the transaction and its associated data, instead of reconciling multiple copies of deal documents. 2017
Blockchain enabled per transaction fees align fees with strategy turnover: clients in transaction intensive strategies agree upfront to higher fees while clients in less transaction rich strategies pay lower overall fees. 2017
Crypto gains are being massively underreported: despite Bitcoin rising from under twenty dollars in 2013 to over twelve hundred dollars in 2017, the IRS received only about 900 Forms 8949 indicating crypto gain or loss over four years. 2017
Because the public blockchain is public and immutable, the technology increases transparency while significantly reducing transaction costs, and intermediaries including lawyers are replaced by code, connectivity, crowd, and collaboration. 2017
Information generated by contingent capital securities may allow regulators to adjust their regulatory requirements and the intensity of regulatory investigations anticipatorily rather than after the fact. 2017
Because whitepapers are not audited by any authority, the preliminary steps of the ICO roadmap, project announcement, executive summary, and investor comments, carry the burden of building market credibility and investor trust in the soundness of the project. 2017
ICOs provide the highest possible liquidity for investors at the very beginning of a platform's lifecycle, before the reporting, accounting, and legal infrastructure that gives the investing public assurance of underlying business success, so investors trade on very limited information and volatility of the tokens and the whole cryptocurrency market increases. 2017
ICOs are not subject to predefined regulatory procedures: whitepapers do not follow prospectus disclosure guidelines, are not reviewed or audited by any authority, and are not subject to any form of rating of the new entrepreneurial initiative. 2017
ICO promoters should not allow tokens to be traded before the underlying protocol network or application is live, and should not use a landing page that focuses almost exclusively on the ICO while providing less content on the product, project, technology, and team. 2017
ICO promoters should make significant and ongoing disclosures on vesting and lockup periods and should never manipulate the smart contract to change ICO sales rules mid-course during the offering. 2017
ICO disclosures should be as clear as possible: promoters should avoid an unclear or uncertain use of proceeds pie chart and should be very clear on plans for converting cryptocurrency into actual company reserves. 2017
Because a public blockchain is genuinely public and immutable, it increases transparency while simultaneously and significantly reducing transaction costs. 2017
Under PFIARA, private investment fund advisers with more than 150 million dollars of assets under management must register as investment advisers and disclose information about their trades and portfolios to the SEC. 2017
The private fund industry's central fear about Form PF was not the filing itself but eventual publicity: if the disclosures ever became public, competitors could reverse engineer fund strategies and largely eliminate managers' ability to generate absolute returns. 2017
Some Form PF disclosure requirements are not answerable as designed, because counterparty credit exposure is sensitive information that individual private fund managers often cannot readily determine. 2017
Because advisers and third party service providers can flatten out and sanitize the information disclosed in Forms ADV and PF, the resulting disclosures may be less useful to the FSOC and the SEC in determining the systemic risk posed by private funds. 2017
Using a regression discontinuity design around the 150 million dollar registration threshold with five years of performance data on more than 3500 reporting private funds, the study finds no significant effect of Dodd-Frank requirements on private fund performance, with all p-values above the 5 percent level. 2017
The FSOC relied most heavily on some of the most problematic disclosure items the SEC collects, even though SEC data played a crucial role at every stage of its systemic risk assessment of private funds. 2017
The mere threat that hedge funds' Form PF systemic risk filings could become public, or be shared between the SEC and the federal bankruptcy bench, could impose some discipline on distressed debt investors' conduct in the bankruptcy process. 2017
The threat of public disclosure of systemic risk filings through the bankruptcy process only marginally affected hedge funds' tactics and their role in distressed investing, because disclosure obligations under the Dodd-Frank Act remained generic and unstandardized. 2017
Increasing shareholder control over executives can be actively counterproductive: it further incentivizes the damaging emphasis on quarterly financial reporting that reform was meant to cure. 2017
Centralized, hierarchical environments do not value honesty and reward good news only, so nobody wants to carry bad news upward, and problems are therefore detected late. 2017
If 51 percent of users collude to enrich themselves maliciously, nothing in the design can prevent them; the only check is the openness of the system, which would quickly detect such an attack. 2018
Many token whitepapers omit information necessary for a full economic analysis, and the research team could not find a single project among the top 100 that had examined blockchain governance fully. 2018
The absence of mandatory disclosure requirements for ICOs leads many promoters to make irregular or no disclosures about the platform over time, producing a significant lack of transparency in the ICO market. 2018
Because ICOs give investors very limited assurances through upfront and continuous disclosures, the token market is highly volatile. 2018
In Australia, an ICO that falls under the Corporations Act triggers additional disclosure requirements, for example where the ICO constitutes a managed investment scheme. 2018
The traditional knowledge transmission model of education is ill suited to a world of fast paced change and easy access to information, because prior experience may not be relevant to a fast changing reality and information is always one search away. 2018
In early Silicon Valley the contractual mechanisms lawyers designed, together with the lawyer dominated market for reputation, reduced information asymmetries between entrepreneurs and investors and were necessary to bring the demand and supply sides of venture capital together effectively. 2018
Blockchain replaces intermediaries, bureaucracy and old fashioned procedures with the four Cs of code, connectivity, crowd and collaboration, which increases openness and speed while significantly reducing costs. 2018
A DAO inhibits rent-seeking and delivers transparency because its governance protocols are open source, so weaknesses are constantly tested and revised in the open rather than hidden inside a managerial hierarchy. 2018