OSC Targets Hedge Funds – Again

Thanks in part to the Madoff scandal still unfolding in the United States, the Ontario Securities Commission has launched a focused compliance review of hedge funds. Managers of hedge funds, including many registered investment counsel and portfolio managers (ICPMs), have been asked to complete a detailed questionnaire on an expedited basis, with a return date of February 20, 2009.

In contrast to the review of hedge funds completed by the Canadian Securities Administrators in 2007, the OSC's current review covers more market participants and can be expected to delve more deeply into the structure and operation of hedge funds. Staff define hedge funds for the purposes of the questionnaire as being "investment pools that use alternative investment strategies not generally available to traditional mutual funds, such as taking both long and short positions and using arbitrage, leverage, options, futures, bonds and other financial instruments to capitalize on market