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The EC’s Directive, which gave the minimum size of the funds that should be regulated (€100m - currently at US$132m) would bring 76% of hedge funds under scrutiny. Gabriel Kurland, founder of Hedge Fund Appraisal, a provider of due diligence services based in Geneva, evaluates the possible consequences of the Directive in his April bulletin:
Since the last G20 meeting, regulators over the world are rushing to establish new hedge
fund regulations. The creation of new regulations has been in various financial watchdogs’ mind for some time, but it is only now that they have the right opportunity and support to push them forward. Indeed, the current financial crisis and disclosure of wide spread fraud schemes perpetrated by numerous fraudsters, including Bernard Madoff, has provided a good catalyst for regulatory change. The main challenge faced by regulators will be to find the appropriate balance between the protection of individual investors’ interests and that of the financial system.
In the G20’s Declaration on strengthening the financial system, it is stated that "hedge
funds or their managers will be registered […]. Where appropriate, registration should be
subject to a minimum size”. By introducing a minimum size criterion, it seems that
regulators are primarily focusing on the reduction of systemic risk of hedge funds. However, regulators also had to consider other factors in their discussion, such as their limited resources and the fact that too mu...................... To view our full article Click here
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