The two key industry associations, London-based AIMA and Washington based MFA, voiced strong concerns on the SEC's registration proposals.
The Washington-based Managed Funds Association (MFA), which represents the US hedge fund industry, issued a strong statement following the SEC open meeting this week during which the SEC approved, in a split vote, the publication of a proposal to impose mandatory investment adviser registration requirements on hedge fund managers.
In essence, the SEC voted 3-2 in favor of publishing proposals for the adoption of a rule under the Investment Advisers Act which will require hedge fund managers with 15 or more investor clients in a fund - with the manager required to "look through" a fund and count each investor in a fund or fund of funds as a client - and more than USD 25 million under management to register under that Act and be subject to the SEC's authorisation, oversight and supervision.
MFA President John G. Gaine stated: "Any resort to governmental regulation has to be carefully considered to ensure that the benefits afforded outweigh the burdens created. The case for mandatory investment adviser registration of hedge fund managers has not been made, and we expect that, once all the facts are in, the proposal will not be adopted."
MFA Chairman Adam C. Cooper said, "We applaud Chairman Shelby of the Senate Banking Committee for calling tomorrow's hearings to address the policy implications of the SEC's proposal and look forward to sharing our initial views on this proposal in our testimony before the Committee. We will carefully review the proposed rulemaking once it is released and intend to work closely with the SEC and other relevant regulators and legislators during the comment period."
Meanwhile, the London-based Alternative Investment Management Association (AIMA), reiterated its view that: "The majority of non-US members are already subject to regulation in their own jurisdictions; limited US rules are preferred for the non-US hedge fund industry."
AIMA will consider the detailed rule, when published by the SEC, and anticipates making a submission in response to the SEC's public consultation on behalf of its members. AIMA said it would focus on the implications for funds and managers domiciled outside of the USA (See previous detailed article by Simon Firth).
AIMA will not make any further comment until it has made its submission to the SEC, the deadline for which will be 15 September 2004.