Budget Constraints May Force SEC To Water Down Hedge Fund Registration

by Phillip Morton, Investors Offshore.com

28 October 2005

The US Securities and Exchange Commission is considering relaxing its hedge fund registration rules to reduce the regulator's oversight burden in the light of recent budget constraints, according to a report by MSNBC.

From February 2006, hedge fund managers with more than $25 million in assets will be required to register with the SEC as investment advisors.

However, Lori Richards, the SEC director of compliance inspections and examinations, was quoted in the report as suggesting that "a lot of discussion" was taking place within the Commission about whether the asset threshold for hedge fund managers should be increased, thus reducing the number of registrations handled by the SEC, which has just had its budget cut.

Florence Lombard, the executive director of the Alternative Investment Managers' Association said that doubling the threshold to $50 million would exclude about 1,000 hedge fund managers from the registration rules, according to the report.

The SEC has denied that a proposal to change the registration rules is currently on the table.

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