The leading hedge fund associations, AIMA and the MFA, each voiced their ongoing concerns over the SEC's vote for hedge fund adviser registration.
In response to the adoption of the controversial new regulatory regime for hedge fund managers by the Securities and Exchange Commission (SEC), the US-based Managed Funds Association (MFA) President John G. Gaine said: "It remains our opinion, and one that is obviously widely held, that the case for the SEC's proposal was not made. Nonetheless, now that the SEC has demonstrated its intention to move forward with the implementation of this regime, MFA is prepared to work closely with and act as a resource to the SEC as it finalizes its rules for hedge fund managers."
He added: "MFA extends its gratitude to Chairman Greenspan, other members of the President's Working Group, SEC Commissioners Atkins and Glassman, a number of Members of Congress, and our many colleagues who, like MFA, have opposed the imposition of this regulatory regime. Three out of every four commenters who took a position on this rule opposed it."
The MFA stated that it "is dedicated to working with the SEC to ensure that this new regime does not unduly hinder or impede the hedge fund industry's development and stressed its commitment to leading its membership in preparing for compliance with the new registration, infrastructure and related requirements (scheduled to take effect in February 2006)."
The MFA said it would carefully monitor developments at the SEC related to the implementation of this new regulatory regime. It cautioned against the imposition of unnecessary and burdensome costs on an industry that is already regulated in a variety of ways and caters to an institutional marketplace.
Gaine said MFA remains deeply concerned that the new regime may entail burdens "that have the potential of damaging the innovation and entrepreneurial efforts that are the hallmark of the alternative investment industry and its ability to provide uncorrelated, risk-adjusted returns to diversified investment portfolios."
In a comment issued yesterday the London-based Alternative Investment Management Association (AIMA) confirmed that the impact on non-US entities is not yet clear.
The association stated: "AIMA filed a Submission in September on behalf of its non-US members with regard to the Securities and Exchange Commission's (SEC) proposed new rules requiring registration of most hedge fund advisers under the Investment Advisers Act of 1940."
"The SEC yesterday voted to adopt the new rules, which we understand will be in substantially the same form as the draft rules published in July, however, the final text of the rules will be published within the next two weeks."
"AIMA will review the text of these rules and advise its members of the implications. AIMA will continue to work with the newly established SEC task force to ensure that the status of non-US managers already registered in their own jurisdictions is taken into account."
"AIMA will strive to avoid the difficulties inherent in separate and possibly duplicative regulatory examination and enforcement regimes and requirements. We reiterate the point already submitted to the SEC that local regulators, who are in constant contact with local industry practitioners and service providers, are in a better position to regulate and perform supervisory examination."
AIMA stated that it will not be making any further comment "until such time as we have reviewed the proposed rules."