July 21, 2006

US Regulations on Hedge Funds

Investment companies registered with the US Securities and Exchange Commission (SEC) are subject to strict limitation on the short selling and use of leverage. These are part of hedge fund strategies and are regulated by the SEC. It has been noticed that hedge funds choose to operate as unregistered investment companies. As a result, interests in a hedge fund cannot be offered or advertised to the general public.

There is a presumption that hedge funds are pursuing more risky strategies in order to avoid the US regulations. Such a strategy might result in heavy losses for the investors. The hedge funds that are regulated by the SEC are more likely to offer greater returns to the investors. In addition, they are less risky and more reliable.

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July 21, 2006 in Regulation | Permalink




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