Systemic risk label would be another layer of regulation for private funds (FundFire)

The recent wave of bank failures also has regulators turning their attention to non-bank financial companies such as hedge funds and other private funds. The Financial Stability Oversight Council (FSOC) recently issued proposals containing guidance on evaluating and monitoring risks to financial stability in areas common to hedge funds and other private funds, ones that could lead to vulnerabilities creating systemic risk. Amy Lynch, FrontLine’s Founder and President, describes the FSOC proposals as adding another layer of regulations on top of the SEC’s current focus to ramp up pressure on private funds through new rules, exams and Enforcement cases. She explains that under the purview of the Federal Reserve, these firms would be viewed through a different lens than the SEC’s, with a different set of rules and regulations requiring compliance programs to be ramped up. Ms. Lynch expects some changes for non-banks from the proposals and recommends that larger firms step up their risk management programs to address the guidance. See FundFire (subscription required), “Hedge Fund Groups Argue Alts Managers Don’t Pose ‘Systemic Risk'”