Foreign Tax Rules Have Hedge Funds Worried

Mar 19 2013 | 11:27am ET

Of all the myriad new rules and regulations facing the hedge fund industry, one of the lesser-known is one of the bigger headaches for the industry.

According to a new poll from DMS Offshore Investment Services, new rules regarding the Foreign Account Tax Compliance Act worry more U.S. hedge funds than any other new regulations—including registration with the Securities and Exchange Commission and Commodities Futures Trading Commission, tough new European Union rules and oversight of registered investment advisors.

The poll asked U.S. hedge fund directors which new rules and regulations most worried their fund sponsors. Some 38% picked FATCA, which requires the disclosure of some foreign assets to the Internal Revenue Service, as the single thing they were most worried about. CFTC registration was cited by 26% of respondents, while just 18% said SEC registration and oversight, and the same number the Alternative Investment Fund Managers Directive.

"The last few years have been unprecedented by way of regulatory oversight—especially for U.S. hedge fund managers," Derek Delaney, who participated in the poll, said. "There managers went from light regulation to having to comply with significant new regulations, reporting requirements and government oversight. This stretched many investment managers from an operation support perspective."

DMS also asked about changes to due-diligence procedures. More than six in 10 respondents said interviews with institutional investors were the biggest change to their process last year, with transparency and regulatory oversight and accountability the biggest concerns expressed by investors in due-diligence inquiries.


In Depth

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

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.