hedge funds and private equity pools have always been subject to less scrutiny than mutual funds and publicly traded companies the explanation for the relative lack of transparency was that their investors were sophisticated and knew their way around the alleys and dead ends of wall street as alternative funds continue to widen their sources of cash to investors who might not be as familiar with the risks involved the securities and exchange commission voted wednesday to force the funds to make quarterly disclosures of equity positions performance and fees and subject themselves to annual audits “it’s a sea change in the sec’s approach” said brian daly a partner at akin gump strauss hauer  feld “this presages far more disclosure into the financial operations of private funds and brings those disclosures closer and closer to that for mutual funds” the move comes 10 months into the tenure of sec chair gary gensler who promised more government activism when it came to protecting investors as head of president barack obama’s commodity futures trading commission gensler had a frontrow seat to the aftermath of the 2008 global financial crisis and his agency wrote dozens of rules to bring the haywire derivatives market into line now gensler has the 18 trillion market for private funds and its more than 5000 registered advisers in his crosshairs the investment pools count hundreds of pension funds as limited partners they include the retirement accounts of public employees such as police fire and teachers these are the types of groups that would be getting more information on their investments under the new rules together they pay moneymanagement fees of 250 billion annually according to the sec privatefund advisers through the funds they manage touch so much of our economy” gensler said in a statement “thus it’s worth asking whether we can promote more efficiency competition and transparency in this field under the new rules private funds such as those managed by wall street giants blackstone kkr and carlyle group wouldn’t be allowed to negotiate preferential terms with certain investors and they’d be barred from conflicts of interest and “compensation schemes that are contrary to the public interest and the protection of investors” according to the sec both democrats on the commission joined gensler in voting in favor of the new rules with the lone republican member voting no there’s currently a republican vacancy on the commission hester m peirce the lone gop commissioner said she feared the rule would “hinder capital formation” and would take away from the sec’s mission to protect smaller investors “the commission judges it wise to divert resources from the protection of retail investors to safeguard these wealthy investors who are represented by sophisticated experienced investment professionals” at pension and retirement funds she wrote in her dissent “these wellheeled wellrepresented investors are able to fend for themselves and our resources are better spent on retailinvestor protection” the regulation will now be subject to a public comment period of at least two months before a final rule is issued it’s expected to be implemented