Certain total return derivatives facing increased scrutiny

August 2014
  • Print-friendly version
Certain total return derivatives facing increased scrutiny

At a glance

On July 22, 2014, the Senate Permanent Subcommittee on Investigations (“PSI”) held a hearing entitled “Abuse of Structured Financial Products: Misusing Basket Options to Avoid Taxes and Leverage Limits.” Although the purpose of the hearing was to probe the use of a particular trading strategy by certain hedge funds, it may result in increased scrutiny around total return derivatives and may further shed a negative spotlight on the industry.