New York Hedge Funds Not Jumping To Conn.—Yet

Jul 8 2010 | 12:08pm ET

In response to a letter from Connecticut Gov. Jodi Rell welcoming New York’s hedge fund industry to move to the Nutmeg State, the New York Hedge Fund Roundtable is offering a cautious “thanks, but no thanks.”

Facing the prospect of a major tax increase in New York, which has proposed closing the so-called carried-interest loophole that taxes performance fee income as capital gains, Rell took the opportunity to invite the Roundtable—and several prominent New York hedge funds—to up sticks for the suburbs. But the hedge funds don’t seem quite ready to move just yet, thanks in part to Rell’s offer.

“Your letter was well-received and we hope that [New York] Gov. [David] Paterson’s recent statements backing away from the tax proposal prove true,” Timothy Selby, president of the Roundtable, wrote to Rell.

“We applaud Connecticut for appreciating the value of the hedge fund industry and for pursuing economic policies that promote its growth,” Selby added. “We only hope, however, that lawmakers in Albany reach the same conclusion.”

Still, Selby sounded far from enthusiastic about a life in bucolic Fairfield County.

“New York is the financial capital of the world and is home to more hedge fund managers and industry professionals than any other state,” he wrote. “This is no accident, as New York offers access to markets, investors and human resources that are unmatched anywhere else.”

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