In the June issue of Managed Account Reports, an article entitled "On the Hot Seat" notes that "[a]mid its push to regulate hedge funds, the US Securities and Exchange Commission is sending signals that it is ready to take a more searching look at capital introduction and other services being provided to hedge funds. Coincidentally, several large brokerage firms and investment banks offering services to hedge funds have been drawing cleaner lines between capital introduction and traditional prime broker services, and some firms have restructured their entire hedge fund service operations. Although most of these moves, including a frenetic shifting of personnel in recent months, are in response to increased competition, many firms are also looking for ways to eliminate the appearance of many of the conflicts of interest highlighted by the SEC....'An educated guess would suggest that firms are taking preemptive measures to address concerns that may head off rule making or a new oversight,' says Jessica Forbes, a partner with Fried Frank Harris Shriver and Jacobson [LLP]. 'Given the scandals, people are particularly sensitive and there are obviously conflicts in this area.'....The SEC has made it clear that it perceives capital introduction to be rife with potential conflicts, says Forbes. 'It's an area that they expect people to be self-evaluative in, and take whatever action necessary to minimize those conflicts and address them to minimize any potential harm to investors.'....The trick...will be to design integrated service that somehow avoids the conflicts. 'People tend to know what the sensitive issues are and can more effectively figure out what areas are most subject to abuse and address them,' says Forbes."