Hedge fund leases at issue

One proactive approach to building a prime brokerage business is to run a hedge fund incubation program. One example would be UBS's "hedge fund hotel," where start up hedge funds lease space from UBS in hopes of hitting it big. At least one regulator, William Galvin of Massachusetts, is a bit concerned with such real estate arrangements. He has subpoenaed several banks, including UBS, about how much lease is actually being charged. If rates are way below market rates, it would be frowned upon by many regulators. At the same time, you have to wonder if lower leases translate to higher commissions and fees. If so, that really ought to be disclosed. So it boils down to a disclosure issue.

For more:
- here's a New York Times article