HEDGE FUND REGULATION

There are several proposals for Hedge Fund Regulation that will affect new and existing hedge funds. The SEC is trying to accomplish two things with the new regulations. (1) Protect investors from fraud and risk posed by hedge fund managers, and (2) at the same time, protect the US economy from systemic risk posed by the larger hedge funds use of complex derivatives and high leverage.

Some of the main issues being discussed are the following:
- Requiring mandatory registration of advisers with assets over $50,000,000;
- Requiring mandatory record keeping of all advisers;
- Requiring mandatory audits of all advisers; and
- Requiring mandatory reporting by advisers of derivatives and leverage used by them.

On June 18, 2009, the SEC gave a public speech on the matter, but final rules will likely take a year. There are several proposals from different groups and everyone wants to be able to say the new regulations were their idea or the regulation that ultimately got adopted was their proposal. SEC Speech on Hedge Fund Regulation