Lawyers Urge Hedge Funds To Move On New Registration Rules

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

17 January 2005

Hedge funds in the United States have been warned that they should begin to look into complying with the SEC's new hedge fund registration rules now, despite the fact that the regulations are not set to be introduced until February 1, 2006.

From that date, hedge funds managing more than $30 million in assets with more than 15 clients will be obliged to register as investment advisers with the Securities and Exchange Commission.

This will necessitate the introduction of written compliance and ethics policies, the appointment of a chief compliance officer, and the keeping of more detailed records, to which the securities regulator must be allowed access.

According to a Reuters report on a recent industry seminar sponsored by the Managed Funds Association, lawyers are warning hedge fund managers to act sooner rather than later.

"Make this a project for the third and fourth quarters. This isn't an overnight process, Seward & Kissel partner, Robert Van Grover told those attending the seminar.

Also speaking at the meeting was the SEC's Investment Management Division director, Paul Roye, who urged hedge fund managers not to attempt to make do with prefabricated compliance documents, arguing that: "One size fits all does not work."

He also sought to reassure the investment professionals attending the seminar, explaining that:

"Hedge funds that are honest, ethical and play by the rules really have nothing to fear from registration."

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