SEC To Approve Hedge Fund Registration Rule Today

Jun 22 2011 | 10:21am ET

The Securities and Exchange Commission will today make officially what has been inevitable for quite some time, voting to require hedge fund managers to register with the agency.

Under the new rule, required by the Dodd-Frank financial services regulation overhaul, all fund managers with more than $150 million in assets under management will have to register and will be subject to surprise examinations. The rule would close an existing loophole that exempts managers with fewer than 15 clients.

But the SEC, already stretched for funds and staff, is punting the issue of smaller hedge fund managers to the state regulators. In fact, according to SEC Chairman Mary Schapiro, the agency will, in fact, oversee fewer firms than before, just 750. Some 4,100 smaller hedge funds will be deregistered and handed over to their local state authorities.

“Even though we are losing in numbers, in terms of amount of assets under the SEC’s oversight, it doesn’t really change,” Schapiro said yesterday. In fact, “there will be more complexity and more investor dollars at risk.”

While it is passing the registration rule today, the SEC said in April that it does not expect to begin registering firms in earnest until next year.

The registration requirement is only the beginning of the SEC’s new authority over alternative investment firms. The regulator plans to require more detailed disclosure from hedge funds and private equity funds in a future rule.


In Depth

Royalties: The Alternative Assets of the Music Industry

Jul 8 2016 | 7:01pm ET

Recent market volatility has investors seeking greater insight into alternative...

Lifestyle

Moore Capital PM Fired After Raucous Hamptons Party

Jul 7 2016 | 10:47pm ET

A portfolio manager for Louis Bacon’s $15 billion hedge fund Moore Capital Management...

Guest Contributor

MPI: Like Stellar Returns? Better Understand the Risks First

Jul 22 2016 | 8:44pm ET

When the press reports extraordinarily strong relative or risk-adjusted returns...