CHICAGO (HedgeWorld.com)–The registry rolls are swelling at the U.S. Securities and Exchange Commission.
Following the Feb. 1 deadline for hedge fund managers to register with the SEC under its new rule and even after the Goldstein v. SEC court decision that called on the SEC to drop that rule, hedge fund managers have been flooding the agency with registration documents.
The experience of Sellers Capital sums up the choices many hedge fund managers faced in deciding whether or not to register. The firm's founder, Mark A. Sellers, originally imposed a two-year lock-up and told investors that if they didn't want the longer lock-up they needed to invest before Feb. 1.
As a small business it didn't make sense for him to take on the additional hassles of registering with the SEC. But in April, Sellers began the registration process following the hiring of additional staff and the offering of a new master feeder fund. The day before the Goldstein decision, June 22, Sellers Capital's registration became effective.
Some 60 firms came to the agency to say they were offering private funds in accordance with the hedge fund adviser registration rule and were approved for registration from June 1 through June 28.
In the next month, much more should be known about the fate of the hedge fund registration rule and pending legislation to reinstate regulation of managers as advisers. Hedge fund attorneys have expressed skepticism over the idea that hedge fund managers would de-register en masse, and for the few that have done so, the motivation doesn't seem to have been the Goldstein case.
SEC Chairman Christopher Cox told the U.S. Senate Banking Committee on July 25 that just over 2,500 hedge fund advisers were registered with the SEC at the end of June, and since the Goldstein decision, more hedge fund advisers have become newly registered than have de-registered.
"In other words, although these are early returns and may not be indicative of the final outcome, we have actually experienced a net increase in hedge fund adviser registrations since the Goldstein decision," Mr. Cox told lawmakers.
In a perusal of the registration listings made public by the SEC, offshore firms such as London-based Eden Rock Capital Management saw their registration documents approved just as the Goldstein decision was being announced.
