SEC Publishes Final Registration Rules For Hedge Funds
The US Securities and Exchange Commission has published its final draft of new
rules that will require most hedge funds managers to register with the financial
market regulator as investment advisors.
Under the existing regulatory framework, each hedge fund to which an advisor
provided investment advice was counted as one client, meaning that until now,
hedge funds were able to trade outside of the remit of the relevant legislation. However, under the contentious changes approved by the SEC, fund managers must
now look through each fund they manage and count individual investors as clients.
This means that any advisor with more that 14 clients in the last twelve months
and at least $30 million in assets under management will be required to register
as an investment advisor. The rules also extend to offshore advisors, who must look through each of the
funds under management and count every investor who is a resident of the United
States. If the fund has more than 14 US-based investors, then it will generally
be required to register with the SEC. The effective date for many of the provisions has been set for February 2005,
and all hedge funds must be in compliance with the new rules by February 1,
2006.
A comprehensive report describing the investment fund sector in most key offshore jurisdictions, with details of the regulatory structure, is available in the Tax News Reports Shop at http://www.tax-news.com/reportshop/
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