Hedge Fund Reader : Netherlands follows suit to Germany seeks regulating the Hedge Funds industry

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September 10, 2005

Netherlands follows suit to Germany seeks regulating the Hedge Funds industry

The Netherlands with Germany is the latest member in the bandwagon to pass regulations for Hedge Funds operations. German Chancellor Mr. Gerhard Schroeder had tried in vain to win the support of the world leaders during the G8 summit in Scotland to regulate the global hedge fund industry. The Netherlands watchdog AFM wishes to regulate the Hedge Funds on four parameters:

§ Hedge funds give little or no historic or future information about its investment policies,

§ They fail to disclose the way of measuring or attributing performance,

§ Each Hedge Fund follows its own valuation principles for its portfolio, and

§ They have an opaque cost structure, which may mislead the customer.

These things are in the pipeline since the time Mr. William Donaldson was the SEC Chairman. But the ball is set to roll with the breakout of the Connecticut-based Bayou Hedge Fund Group last fortnight. The Netherlands currently has about 5 hedge funds, and additional 45 funds of hedge funds operating in the country. HedgeCo.Net Reports:

Last year the United States Securities and Exchange Commission under former Chairman William Donaldson passed new hedge fund laws for hedge funds operating in the United States. But the law stimulated significant opposition and controversy, to the point that it is the subject of a law suit by one New York based hedge fund manager. While time for the implementation of the US hedge fund laws is fastly approaching, it still remains unclear if the laws will become fully operational by early next year’s deadline.