Hedge Funds Brace For More Regulation Under Obama

Nov 13 2008 | 12:24pm ET

Hedge fund managers are bracing for increase regulation, and their associated costs, under the incoming administration of President-elect Barack Obama.

A new report by Rothstein Kass says that while managers agree that associated compliance costs will make hedge funds more costly to operate, they also say it will not lead to more fund closures or fewer start-ups.
“Though hedge fund managers readily acknowledge that a more restrictive regulatory environment looms, the industry seems well-positioned to meet the demands of increased compliance,” said Howard Altman, co-managing principal of Rothstein Kass. “Despite the fact that nearly 84% of participants believe that compliance costs will make funds more costly to operate, fewer than seven percent expect that this will lead to increased costs to investors.”

“Moreover, based on the research, it does not appear that the impact of increased regulation will impede fund launches or accelerate closures,” Altman added. “Fewer than 6% of participants agreed that compliance costs will lead to more closures, with a similar percentage reporting that there will be fewer start-ups due to increased regulation.” 

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