Tue, 10/11/2009 - 12:05
The Hedge Fund Association has made progress on its Speak Up campaign, which seeks to ensure that regulation of the hedge fund industry meets government concerns without imposing over-reaching measures that make it costly for small funds to operate.
HFA president David Friedland says the HFA is not opposed to additional regulation and registration or reporting requirements.
"The HFA is open to working with Congress to ensure that any regulation is cost effective and achieves objectives that both Congress and the industry need."
Friedland says all hedge funds are already subject to certain rules and regulations, including SEC anti-fraud provisions.
However, he says proposals from Congress to regulate funds with assets under management of over USD30m could result in smaller hedge funds, which form the vast majority of firms, to close their doors, “causing a devastating impact on an industry already suffering from the effects of the financial downturn”.
“This will result in a loss of jobs not only within those hedge fund firms, but also at the administrators, law firms, auditors, banks and brokers who rely so heavily on smaller/startup funds for much of their business."
The Speak Up campaign was launched with the aim of educating lawmakers and the media of the burden that new regulations would place on smaller hedge funds.
"Some form of registration requirement and reporting requirement for firms with more than USD250m would seem to make the most sense," says Friedland. "Typically firms with more than USD250m have a much larger internal staff than firms managing smaller funds. The larger firms can take on the burden of increased registration/reporting requirements and an internal compliance officer in a much more economical fashion."
As a result of this campaign, recent legislation being proposed by Congress would raise the registration requirement from assets under management of USD30m to USD150m.
"It's not as high as we would like, but we appreciate that lawmakers have listened to the concerns of the HFA and taken steps that would protect the small managers from the burden of excessive regulation," adds Friedland.
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