Hedge Funds Urged Not To Wait To Implement New SEC Rules

by Glen Shapiro, LawAndTax-News.com, New York

11 November 2004

Asset management and investment technology solutions provider SEI Investments has urged hedge funds not to delay implementation of the new registration and record-keeping requirements approved by the Securities and Exchange Commission last month, despite industry threats to challenge the legitimacy of the proposed rules in court.

During a recent seminar held by the SEI Knowledge Partnership, which is an initiative of the firm's Investment Manager Market unit, SEI panelists suggested that the hedge fund sector is unlikely to be able to maintain the regulatory status quo even if legal challenges are issued, given the determination of SEC chairman William Donaldson to tighten requirements for hedge funds, and the prevailing mood amongst investors.

"Regardless of whether the regulation is enacted or held up, we're likely to see registration becoming a best practice that more and more institutional clients, enterprise clients, and gatekeepers for high-net-worth clients will be using as a due diligence screen," Pauk Schaeffer, the Knowledge Partnership's director explained.

Meanwhile, Jim Volk, chief accounting officer and chief compliance officer for SEI Investments' Fund Accounting and Administration business observed that:

"These are major changes that may make hedge funds feel slower and less competitive."

However, he added:

"But remember, other advisors have been subject to registration requirements for years, and nearly all hedge fund advisors will be subject to the new rule."

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