In the conversations the hedge fund community will be having with Congress and the regulators in the coming months regarding increased regulation, we should look to shared answers to the issues which need to be addressed. In this vein, I have been researching the speeches of prominent SEC personel. I have just recently reviewed a speech by former Commissioner Paul Atkins regarding regulations and how regulations impact the investment management community. Perhaps surprising to some, the former Commissioner showed reasonably thinking with regard to increased regulation.
The speech, reprinted in its entirety below, was given in the wake of the proposed adoption of two rule changes back in December of 2006. The first proposed rule change was to amend the Investment Advisers Act so that it was clear that hedge fund managers had an anti-fraud duty to the investors in their hedge funds as well as the hedge funds themselves. The second proposed rule was the “accredited natural person” rule which would effectively change the potential make up of hedge funds by requiring a different net worth threshold for investors in hedge funds. There were a significant amount of comments to the proposed rules which stated that it would be a bad idea to raise the net worth requirements for hedge fund investors. Neither of the proposed rules have been adopted and it is unlikely that they will be, at least in the near future. Continue reading