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January 11, 2006
SEC pushing for registration of Hedge Fund Managers
The Securities and Exchange Commission (SEC) staff has reportedly recommended that hedge-fund advisors register with federal authorities. Such a move would give regulators better insight into the largely unregulated US $600 billion hedge-fund industry. Although the staff report stops short of hinting at registration of hedge funds as an entity, there is bound to be industry rebound in terms of reaction and fund performance. Even if the registration bit doesn’t come out as feared, this is likely to impact the investor confidence and leave a dent in the new investment pouring into the hedge funds sector. So more than the issue at hand the propaganda around it is likely to cause more damage.
According to the estimates of the SEC staff, there are between 6,000 and 7,000 hedge funds in the United States, and only about one-third of hedge-fund advisers now register with the SEC voluntarily. The likely motive behind the drive for the SEC is to gain deeper insights into the strategies deployed by the hedge fund managers.
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