US Hedge Fund Managers Anticipate More Regulation

by Carla Johnson, Investors Offshore.com

01 July 2003

Citing the results of a survey conducted by Broadgate Consultants late last month, the Wall Street Journal has revealed that many hedge fund managers believe that the US Securities and Exchange Commission's (SEC) ongoing probe of the industry is likely to lead to increased regulation, a prospect which some are actively welcoming.

According to the WSJ, of the 65 hedge fund managers questioned by Broadgate, more than 80% believe that the SEC will increase its oversight of the industry, but around half of those believe that this is a necessary move in order to continue to attract large institutional investors.

'Hedge funds have shown extraordinary growth in the past few years, and this will inevitably bring with it more demands for transparency,' the US business daily quoted Broadgate's chairman and chief executive, Thomas C. Franco as observing.

The SEC investigation into hedge funds was prompted by concerns regarding what was seen as the increasing 'retailization' of the industry, and is expected to impose new registration and reporting obligations on hedge fund managers, as well as tightening restrictions on who can invest in the vehicles.

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