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December 06, 2004 at 07:00 PM
WASHINGTON (HedgeWorld.com)–Little differs between the proposals the Securities and Exchange Commission originally made regarding its regulation of hedge fund managers and the final rule it just published
Little, perhaps, except for the lengthy documentation providing the agency’s reasoning behind its new rule 203 (b)(3)-2 and accompanying the final rule. In making their case for the registration of hedge fund managers as investment advisers, commissioners and staff supplied lengthy footnotes to a document that now totals 160 pages.
Overall the rule remains the same as it did in its infancy. If you are a U.S. hedge fund manager with more than 14 clients and US$25 million in assets, you will need to become a registered investment adviser.
The deadline for compliance is February 1, 2006.
A separate section stipulates that firms with less than a two-year lock-up provision will also be eligible for registration. This separate provision allows for the exclusion of private equity firms and venture capital funds, many of which opposed the rule fearing inclusion in future SEC rulemaking.
Most of the SEC final rule release is spent defending the commissioner’s decision, while the final thirty pages carries the dissent of Commissioners Cynthia S. Glassman and Paul Atkins.
