Conn. Considers State Hedge Fund Regulation

Feb 26 2010 | 4:03pm ET

It died on the vine last year, but Connecticut lawmakers have resurrected a bill that would impose new reporting requirements on hedge funds based in the state.

The Connecticut legislature’s banking committee held a hearing on the bill, which easily passed the Senate last year but did not receive a hearing in the House of Representatives, yesterday. Last year’s version of the bill would have forced hedge funds in the Nutmeg State to disclose any conflicts of interest between investors and fund managers.

That bill will be “a starting point” for this year’s version, sponsor and Banks Committee Co-Chairman Robert Duff said. Duff blamed inaction on the federal level—despite widespread support, even within the hedge fund industry, hedge fund regulation has been bottled up in Washington amidst disagreements on other parts of an overall financial regulation overhaul—for the return of the proposal.

“I’ve had a lot of people inside the industry tell me that I was right on with this bill,” Duff told the Hartford Courant. “Even in their opinion, we could go further.”

Not everyone in the world’s third-largest hedge fund center is quite so gung-ho.

John Brunjes, a partner with the law firm Bracewell & Giuliani and a member of the Connecticut Hedge Fund Association’s board of directors, called the Connecticut bill “duplicative of what is currently required under federal and state law.”

“It distinguishes Connecticut not as a state that is friendly for managers to do business here, but one that makes it more burdensome and in a way that does not appear to serve the goal of investor protection,” Brunjes told FINalternatives.

Brunjes warns that, if the bill were to become law, it could trigger an exodus of hedge funds from southwestern Connecticut to nearby Westchester County in New York.

“It takes very little for them to say, enough is enough, I’m headed over to Westchester,” he said. “Rents in White Plains are substantially less than class A space in Greenwich. It’s a significant enough motivator for them to realistically consider moving.”

Brunjes, who spoke to FINalternatives yesterday while in Hartford lobbying against the measure, concedes that the bill “has a fair chance of passing.” But he is stressing that momentum on the federal level appears to be returning, and that Connecticut’s regulation should “continue to be driven at the federal level.”


In Depth

Part II: Roubini Talks Risk, Recovery And The Threat Of A Triple Dip Recession

Oct 21 2014 | 12:41pm ET

In the second half of our interview with Nouriel Roubini, FINalternatives editor...

Lifestyle

Balyasny Pays Over $6M For Lakefront House

Oct 22 2014 | 10:29am ET

A venture headed by hedge fund manager Dmitry Balyasny just paid $6.2 million for...

Guest Contributor

Hedge Funds Weather A Data Management Perfect Storm

Oct 22 2014 | 12:28pm ET

From a regulatory standpoint, nearly every development since the crisis has placed...

 

Videos

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

October 2014 Cover

Deeply flawed risk benchmark

Most traders agree that proper risk management is the key to successful trading. However, many traders depend on the deeply flawed measure of standard deviation as a benchmark of risk. Here we put it ...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.