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Alternative Market Briefing

New US registration requirements likely to impact funds 'on the cusp'

Tuesday, July 20, 2010

From Kirsten Bischoff, Opalesque New York:

At this point it is only possible to guess what impact "The Restoring Financial Stability Act of 2010" will have on the hedge fund industry. By all accounts the inclusion of hedge funds into more sweeping regulation has been a long time coming. And although hedge funds now have new asset requirements before their investment managers are required to register, most managers will acknowledge that the industry was able to dodge many less savory possibilities that could have been included. With half of all hedge fund managers already registered with the SEC (HFR, 2009), most managers will likely be more affected by OTC derivatives and other markets regulations than they will by hedge fund advisor registration requirements.

However, for those managers that will be impacted by registration it appears that those managing small- to mid-sized hedge funds will bear the biggest burden of change relative to AUM. "The smaller funds that are just on the cusp of the asset requirements for manager registration [$100m-$150m depending if a firm manages funds outside of the private fund] are the ones that could be highly impacted," says Henry Bregstein, Global Chair of the Financial Services Practice and Co-Managing Partner at law firm Katten Muchen Rosenman LLP.

Federal level oversight Although media and politicians tend to describe funds that meet asse......................

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