If you can’t beat them, hire them. That seems to be the strategy with several major hedge funds as they hire former U.S. Securities and Exchange Commission officials to consult for their firms.
Reuters reports that hedge fund manager John Paulson has hired former SEC chairman Harvey Pitt and former commissioner Roel Campos to help beef up compliance and governance at some of his funds. Israel Englander’s $7.8 billion Millennium Management fun has brought in former SEC commissioners Aulana Peters and Joseph Grundfest.
Some on Capital Hill worry that this is sending the wrong message about the coziness between Wall Street and government agencies. But it’s likely more hedge funds will follow suit, given the additional oversight and regulatory scrutiny to which hedge funds will be subjected.
Hedge fund managers will want to know “the best way to prepare for the new onslaught of regulations, identifying and responding to potential and actual conflicts and improving investment decision-making,” according to an email written by former SEC exec Harvey Pitt.
High-level SEC employees have frequently left government to take lucrative jobs in the securities industry, according to Senator Ted Kaufman, a Democrat from Delaware, and a critic of the SEC.
It does highlight another career path for those aspiring to a hedge fund job. Industry insiders say a regulator-for-hire position can snag anywhere from $10,000 a year to $100,000 or more per assignment.
What’s your take? Is it acceptable for former regulators to do advisory work for the very people they used to oversee? Have you, or anyone you know, made the transition from government agency to hedge fund job? Add your comments below.
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In my previous firm, we hired a middle level SEC employee for a senior position. I did not know the advantage of doing that. In one year of working with him has enriched all of us in knowing many legal frameworks which we were not aware of.
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