The Securities and Exchange Commission recently announced new rules for hedge funds to report on equity short positions. There’s nothing terrible in the rules, but they will impose pointless costs on investors, mainly because they were written by lawyers rather than accountants.
Of course, every new diktat prompts complaints about the costs, but in this case they are greater than they may seem.
Asking investment managers to detail their short positions sounds easy — just press a button and get a report from your securities database to send to the SEC. The trouble is large investment managers can have hundreds or even thousands of funds, separate accounts, subaccounts, master/feeder funds, advised funds and other legal entities, each with its own balance sheet....
