Friday, 25 July 2014
Last updated 4 min ago
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.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…