There was a time before the markets crashed when many UK hedge fund managers avoided going after investors in the United States because they were afraid of the complex maze of regulation in a litigious culture. Welcome to 2009 – a brave new world. Fund managers have emerged bruised and battered from the bloodbath of the previous year and are looking across the Atlantic to raise assets. New legislation introduced in both the US Senate and House of Representatives is set to significantly increase the number of UK managers required to register with the SEC as an investment adviser. This is the time for compliance officers to be thinking of how they can develop one efficient compliance programme that meets the highest regulatory hurdles of both the Financial Services Authority and Securities and Exchange Commission.

In my professional view, compliance is essentially a customer service role. Compliance officers are tasked with providing solutions to move the business forward while minimising regulatory risk. Compliance can bring significant added value in a number of ways: assisting with the launch of new products, ensuring that the fund investor experience is seamless and professional, and utilising its unique role in the firm to advise senior management on risk management and controls across the business. However, in order to perform this role properly and proactively, compliance needs to fully understand the business and its risk appetite, understand the applicable regulations and the rationale behind them.

Long gone are the days when the compliance officer could say “no” simply because he or she didn’t understand the regulations or share the same risk appetite with the firm. Today’s Compliance Officer must understand the differences between regulation, best practice, industry standard and commercial decisions. Compliance, after all, means compliance with applicable regulation.

US Regulation set to increase number of UK managers required to register with the SEC as an Investment Adviser
In the United States, almost 11,000 investment advisers are registered with the SEC. Of the advisers based outside the United States, over a third are based in the UK - more than twice the number from any other single foreign jurisdiction. Two thirds of these advisers are managing hedge funds and other pooled investment vehicles.