Heightened regulatory scrutiny and investor expectations in today’s hedge fund environment have prompted many fund managers to look to technology solutions to increase the effectiveness and efficiency of their compliance programs.  Lori Richards, principal of PricewaterhouseCoopers LLP (PWC) and former Director of the U.S. Securities and Exchange Commission’s (SEC) Office of Compliance Inspections and Examinations, recently published a report (Report) entitled “Integrating technology into your compliance program to improve effectiveness and efficiency.”  The Report states that maintaining manual compliance processes can be time-consuming, costly and prone to error while technology enhancements can provide numerous benefits for a fund manager, including: enhancement of the efficiency, accuracy and consistency of data gathering; scalability of technology infrastructure for firm growth that is resistant to staff turnover; demonstration of a compliance culture to regulators and investors; reduction in the burden of inspections with easily generated reports; and overall cost efficiencies.  For a similar argument in favor of automation, see “Spreadsheets Can Stunt a Hedge Fund Manager’s Growth,” Hedge Fund Law Report, Vol. 4, No. 31 (Sep. 8, 2011).  The Report also cautions that piecemeal automation of compliance processes can lead to nonintegrated systems that are costly to maintain and unable to provide a consolidated risk assessment across the firm.  Additionally, firms that do not appropriately utilize technological solutions to modernize their compliance programs may not be able to meet industry standard practices.  The crux of the Report surveys the types of technology solutions that can enhance a hedge fund manager’s compliance program and details the process fund managers should use in selecting vendors.  See “Hedge Fund-Specific Issues in Portfolio Management Software Agreements and Other Vendor Agreements,” Hedge Fund Law Report, Vol. 4, No. 26 (Aug. 4, 2011).  This article details the contents of the Report and highlights the lessons most critical to hedge fund managers looking to apply best technology practices to their compliance policies and procedures.