In March 9, 2009 letter to Managed Funds Association (MFA), the hedge fund trade association, and the Investment Adviser Association (IAA), Gene A. Gohlke, Associate Director of the SEC’s Office of Compliance Inspections and Examinations, said that in “recent months,” his staff has decided that to verify assets, it will have to request independent confirmation of investor assets from various third parties.  In his letter, Gohlke told the MFA that to confirm the existence of assets managed by the adviser being examined, the staff may contact the following individuals and entities: bank and broker-dealer custodians; account administrators; investors in hedge funds managed by the adviser; advised clients; derivative counterparties; hedge fund administrators and/or managers that are invested in by advised clients; National Securities Clearing Corp., Depository Trust & Clearing Corp.; and auditors for the advisory firm and/or investor accounts.  We outline the salient points from the letter, and provide insight from industry participants into the potential implications of the letter for hedge fund managers.