MIK Addresses New Reporting Rule

appeared on Hedge Fund Alert on May 25, 2011

Hedge fund software developer MIK Fund Solutions is crafting an application designed to make it easier for clients to meet pending SEC reporting requirements.

The New York firm, led by veteran hedge fund technology specialist Fadi Kaddoura, provides data-management services to about 30 clients, including some of the industry’s biggest managers. MIK is currently test-driving a program that would automate the process of filing SEC “Form PF,” a 44-page document fund operators soon will be required to file quarterly or annually. The plan is to make the application available to existing clients, but MIK also sees it as an opportunity to attract new business.

The new reporting requirement is causing agita for hedge fund executives, lawyers and compliance professionals. While they’ve gone on record supporting the idea of fuller disclosure, they’re concerned about the logistics and added cost of completing the lengthy SEC form within 15 days of the end of a reporting period. Managers with more than $1 billion of assets will be required to file Form PF quarterly, while smaller managers face annual filings.

MIK’s software already aggregates reams of data about trading positions, profit and loss, risk exposures and asset values. The new application is designed to cull the data and spit out a completed Form PF at the end of each reporting period.

MIK has been beta-testing the application with a draft Form PF available on the SEC’s website. Early tests show the system is capable of quickly and accurately processing the information. “Form PF is a challenge, and I know we as a company can help,” he said.

The SEC issued its proposed reporting rule on Jan. 26. Hedge fund attorneys expect the proposal will be adopted in its final form no later than July, with implementation set for the first quarter of 2012.

Kaddoura, whose resume includes stints at several multi-billion-dollar hedge fund firms, founded MIK in 2006. Over the past 18 months, he has tripled the size of his staff to about 40.