Hedge Fund Industry Event Draws Large Turnout from Chicago Financial Community

News / June 18, 2013

The old Milton Bradley game “Trouble” and its Pop-O-Matic die container took on new meaning when CFTC Commissioner Bart Chilton used the prop to zero in on the trouble afflicting global and domestic financial markets in his keynote address “Rock’n the Trouble” at a BakerHostetler-hosted event at the Chicago Yacht Club on June 18. Chilton and Litigation Partner and event Moderator William Kane worked together to tackle some of the current issues facing the hedge fund industry. Chilton addressed one of the six topics he prepared based on the die number Kane read out loud after popping the Pop-O-Matic.

BakerHostetler is no stranger to the new and unpredictable financial and regulatory landscape, according to Kane and panelists Marc Powers, Securities Litigation and Regulatory Enforcement Practice Team leader and Hedge Fund Industry Services leader, and Mark Kornfeld, core members of the firm’s Hedge Fund Industry Services and Task Force on Complex Financial Fraud. They predicted hedge funds will face more litigation and regulatory scrutiny than ever before.

Kane’s introductory remarks compared the markets in 1988 to those of 2013 and the impact technology has had, including the recent hoax Twitter feed that roiled markets in May. As a result of the Dodd-Frank Act, Powers pointed out, hedge funds are more heavily regulated and need to take regulatory compliance as seriously as broker-dealers. Broker-dealers, though, have a head start: they "got pounded" by regulators for their securities law violations and lapses over the past 30 years, he noted. "Now," he said, "it's the hedge funds' turn."

“With the industry marked by controversy and scandals, unsettled legislation, assets in excess of $2 trillion and growing, with institutional pressure on fees, and an increasing demand and chance to market to retail investors directly,” Kornfeld explained in his remarks, “increased litigation exposure for funds and their managers is inevitable.”

More than 70 guests from the Chicago-based commodities trading and financial community listened to the panel members, which also included representatives from Deloitte and Charles River Associates, warn of a litigious future for the industry.

Discussions on the short and long-term future of the investment fund industry continued at a cocktail reception following the presentation.

Members of the media in attendance included The Wall Street Journal, Financial Times, Reuters, CFTC Law and the Chicago Daily Law Bulletin.

Read Bart Chilton’s full speech.