Obama loves hedge funds

June 17, 2009

Matthew GoldsteinThe big winner in the Obama administration’s financial regulatory reform package is the beaten-up hedge fund industry.

Hedge funds get a particularly “light touch” when it comes to government oversight in the Obama plan. Essentially, the administration is calling for a reinstatment of a Securities and Exchange Commisison rules that requires managers to register with the agency as investment advisors.  The rule was overturned by the federal courts, but many large hedge funds remained registered with the SEC–even though they weren’t required to do so.

The registration requirement would give the SEC the authority to conduct periodic inspections and require hedge funds to report information on trading positions. But the information reported by the hedge fund would remain confidential and not shared with the general public.

Some in the $1.1 trillion hedge fund industry feared managers might be required to publicly report “short” positions on stocks. But there’s nothing of the sort in the administration’s proposal.

In short, the registration requirement is no big deal and don’t expect much squawking from the hedge fund industry. Obama gave them a great a big kiss.


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