NEW YORK (HedgeWorld.com)–Andor Capital Management registered with the Securities and Exchange Commission when it started up in 2001. And it was the very first hedge fund SEC examiners visited when they began a study approximately 18 months ago that this week resulted in a recommendation to require hedge funds to register.
For Andor, the experience has been positive, if costly. “It was a pretty easy decision for Andor, predicated on our desire to build an institution,” said Jolyne Caruso, president of the firm. “The most important factor for us was that we were already a large firm.”
Andor was big at inception–with more than US$7 billion in assets that founder Dan Benton took with him when he left Pequot Capital. It has grown since to more than US$9 billion with offices in the United States, Europe and Asia Previous HedgeWorld Story Previous HedgeWorld Story.
Not that everybody in the new firm agreed about registering–some were not happy about being subjected to scrutiny and surprise audits by regulators and having to generate the enormous amount of paper work required from registered investment advisers. Indeed, having SEC staff parked out on the premises for a couple of weeks last year might have caused some anxiety.
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But the group wanted to grow beyond the eight funds it had at the beginning and gain institutional clients. Being an RIA is an important advantage in raising money from pensions and other institutions Previous HedgeWorld Story.
Ms. Caruso was speaking at a panel organized by 100 Women in Hedge Funds Oct. 1. That day happened to be the second anniversary of Andor’s official start. The firm now has eight people working on meeting regulatory requirements. A manager needs to have enough resources to afford this, she pointed out.
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Compliance work can be contracted out to an outside attorney, and a manager that has a single fund and assets below a threshold probably would do that instead of building its internal compliance team as Andor has done. “But size is a consideration,” observed Ms. Caruso. “You have to make sure at all times you have your house in order.” Not something that comes cheap.