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Alternative Market Briefing

New managers may be facing a perfect storm of obstacles

Thursday, May 10, 2012

Bailey McCann, Opalesque New York:

A volatile global economy, political uncertainty in the US and abroad, and an ever expanding list of regulations is creating a 'perfect storm' of obstacles for new managers looking to launch funds according to Richard Heller, Partner at US law firm Thompson Hine and Director of the Hedge Fund Association. The size of new launches is shrinking and new managers are finding a very difficult capital raising environment regardless of their pedigree, conditions which are having a chilling effect on new fund launches and the industry at large. This trend is likely to effect the industry for the foreseeable future despite new allowances like those passed with the JOBS Act.

The JOBS Act repealed a prohibition on general solicitation that typically kept most hedge funds from advertising, but Heller is quick to point out that rules aren't yet finalized. "The JOBS Act is not an out and out panacea, there will still need to be details ironed out even after the rules are released, specifically when it comes to the inconsistencies with private offerings requirements in the existing rules," Heller said in an interview with Opalesque at the SALT Conference.

He explains that advertising will likely be geared around new fund launches, and increasing awareness as medium and smaller size funds try to compete against the Paulson's of the world. However, funds need to be careful, "anti-fraud provisions are still on the books. People a......................

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