Hedge Fund Regulation Now Only A Question Of How

Hedge Fund Regulation Now Only A Question Of How - 3/30/2009

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Hedge Fund Regulation Now Only A Question Of How
Evan Weinberger

Law 360. March 30, 2009
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EXCERPT: The oversight of hedge funds and private equity firms has been a sort of Holy Grail for federal and state regulators. With several hedge funds at the center of the financial collapse, including two at Bear Stearns that precipitated the investment bank's fall and the Madoff Ponzi scheme, the quest for increased scrutiny may soon come to an end. “Without question there is some form of regulation coming down the pipeline,” said Caroline B. Blitzer, a partner with Vinson & Elkins LLP who represents private equity funds. But from that starting point, the coming regulation of hedge funds, private equity, venture capital and other private pools of capital gets murky. Among other issues, the question remains as to whether regulating the funds or the fund managers is the most effective strategy, particularly given the global nature of many of the alternative investments. […] There are currently two pieces of legislation before Congress that would regulate and one that would study hedge funds, according to the titles of the bills. The bill that has generated the most heat is the Hedge Fund Transparency Act, introduced by Sen. Carl Levin, D-Mich., and Sen. Chuck Grassley, R-Iowa. Under that bill, any hedge fund with control of $50 million or more in assets would be required to register with the U.S. Securities and Exchange Commission, among other broad provisions. Much of the bill leaves the actual details of regulation up to the SEC. But the Hedge Fund Transparency Act, much like the other bills before Congress, plays a bit loose with language. “It's very clear that despite the name of the Hedge Fund Transparency Act, any bill will extend past hedge funds to include many private equity funds,” Blitzer said.

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