July 26, 2011

George Soros to Retire, Blames Dodd-Frank

‘The Man Who Broke the Bank of England’ will not register with SEC

George Soros will convert his Quantum Group of Funds into a family office. (Photo: AP) George Soros will convert his Quantum Group of Funds into a family office. (Photo: AP)

Legendary hedge fund manager George Soros, perhaps best known for forcing the British government to devalue the pound during the infamous “Black Wednesday” market crisis, is retiring from investing.

A letter to shareholders signed by Soros' sons Robert and Jonathan blames new hedge fund regulation required under the Dodd–Frank Wall Street Reform and Consumer Protection Act. Soros’ Quantum Fund will return roughly $750 million to investors.        

“We are writing to inform you of an important new development relating to regulations recently announced by the U.S. Securities and Exchange Commission,” the letter begins. “As you may know, the new regulations will require certain private investment advisers to register with the SEC by March 2012. An exception to this requirement is available if an organization operates as a family office.”

As a consequence, the investing scions write, the Quantum Group of Funds will “no longer be able to manage assets for anyone other than a family client as defined under the regulations. As a result, SFM will ask Quantum’s Board to return the relatively small amount of non-qualifying capital to outside investors before the registration deadline, most likely at year end.”

The letter notes that the firm remains committed to its goal of producing superior returns for its clients and “will continue to conduct its business to the highest standards of the industry,” however, it reiterates that its clients going forward will only be “family accounts and related entities.”

This is not the first retirement for the Hungarian-born Soros, who left the business in 2000 to focus on philanthropy and liberal political activism, only to return to money management in 2007 as the subprime mortgage crisis took hold.

“We wish to express our gratitude to those who chose to invest their capital with [Soros Fund Management] over the last nearly 40 years,” the letter concludes. “We trust that you have felt well rewarded for your decision over time.”

The SEC’s new reporting requirements subject hedge funds to inspection by regulators. Funds with over $150 million in assets will be required to divulge information about investors, employees, conflicts of interest and other information once kept confidential.

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