As the use of alternative data by hedge fund managers increases, the risks relating to that use – including issues relating to insider trading, regulatory scrutiny, data privacy considerations and cybersecurity concerns – similarly grow. Managers must thus ensure that they are cognizant of and mitigate any risks as they employ alternative data in the pursuit of alpha. A recent webinar
presented by the Hedge Fund Law Report reviewed the above risks as part of an in-depth look at the regulatory and compliance issues involved in collecting and using alternative data. William V. de Cordova, Editor-in-Chief of the Hedge Fund Law Report, moderated the program, which featured Stacey M. Brandenburg, shareholder at ZwillGen; Jeffrey D. Neuburger, partner at Proskauer; and Adam J. Reback, director at Optima Partners. This second article in our two-part series details the panelists’ thoughts regarding insider trading, regulatory risk, data privacy laws, cybersecurity and web scraping. The first article
covered the portions of the webinar that explored data gathering and managing third-party data providers, including due diligence, contract provisions and associated issues. See “Best Practices for Private Fund Advisers to Manage the Risks of Big Data and Web Scraping
” (Jun. 15, 2017).