Hedge Fund Lawsuit Financing Poised for SEC Enforcement Scrutiny
Securities Enforcement Defense attorney Scott Mascianica spoke with Bloomberg Law about a recent proposal from the U.S. Securities and Exchange Commission (SEC) requiring private funds to report their spending on litigation finance. Under current SEC rules, hedge funds can avoid specific disclosures about litigation finance, but under the proposal, they would have to report the percentage of their funding that goes toward it, albeit confidentially. Mr. Mascianica explained that the potential reporting represents part of the SEC's push for broader hedge fund transparency, adding that the bigger the investments in litigation finance, the more likely the agency will want data on them.
"They'll use it as a tool in their toolbox to aid their enforcement and their exam program," he commented.