Fines for alternative fund managers for breaking regulations could be on the rise, research has found.
According to global research by Ocorian, a provider of fund administration, capital markets, corporate and fiduciary services, 79% of fund managers at private equity, venture capital and real estate firms expect the number and overall value of fines issued in their sectors for breaking regulations will increase, with 18% expecting a dramatic rise. Additionally, 86% of these firms are making preparations or budgeting for potential increases in fines.
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Nearly 79% of respondents believe their market is over-regulated, yet 85% foresee increased regulation over the next five years. Regarding regulatory adherence across jurisdictions, only 29% find it unproblematic, while 30% find it very difficult and 37% find it quite challenging. Looking ahead, 59% anticipate greater difficulty, with just 27% expecting it to ease.
In terms of regulatory compliance within their organizations, only 30% consider themselves excellent, while 66% rate their compliance as good, and 1% deem it poor. Regarding board engagement, 54% prioritize regulation and compliance, 41% somewhat focus on it but could improve, and only 4% neglect its significance.
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Aron Brown, head of regulatory and compliance at Ocorian, commented “Good governance and robust compliance preparedness enhances commercial prospects and wins business. We see investors are increasingly cautious about where they invest so if they can find a good governance and compliance framework, they are more likely to invest.”
The research highlighted various responses by alternative fund managers to regulatory challenges. Notably, 65% invested in compliance technology, 55% avoided significant investments due to regulatory concerns, and 53% closed business divisions for the same reason. Additionally, 27% increased outsourcing, while 24% sold businesses to address regulatory issues.
