The SEC announced that it will most likely look at four main areas when examining newly registered hedge fund advisers.

Those areas are marketing and advertising, portfolio management, conflicts of interest, and client asset safety.  This approach will be followed as a result of certain risk assessments made by the SEC Staff.  Essentially, the SEC Staff does not believe the proverbial "proctology" examination will be conducive to uncovering problems in a quick and efficient manner.  Gee, we could have told you that!!

In any event, these exams will, most likely, be conducted much more quickly than the traditional investment adviser examinations, thereby, extending the SEC's "presence" in this arena.  That may be the SEC's ultimate goal, establishing its imprint in this sphere.

We will monitor these exams to mine more data as they proceed over the next 18 to 24 months.