The 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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9 comments so far
Are you implying that forcing hedge funds to publicly report their short positions would have been a good idea?
- Posted by Felix SalmonFelix, no i’m not. That would have been a bad idea. Just pointing out that hedge funds had less to fear from the administration than some were saying.
- Posted by Matthew Goldstein[...] funds avoid the heavy hand of regulation in the administration’s plan. (Matthew Goldstein via [...]
- Posted by Wednesday links: random market moves Abnormal ReturnsYou analysis is completely wrong — as a hedge fund manager myself I find Obama’s proposals very harsh. http://www.FinAlternatives.com has a good comment on it: http://www.finalternatives.com/node/8258
- Posted by Alex Cohen[...] Goldstein, Salmon’s colleague at Reuters, says “The big winner in the Obama administration’s financial regulatory reform package is the beaten-up hedge fund [...]
- Posted by They’ll Be Watching the Defectives - The Opinionator Blog - NYTimes.com[...] Goldstein says yes, as evidenced by the fact that no cruel or unusual restrictions or regulations are placed on them [...]
- Posted by What Guru’s are Saying : Hedge Funds Back In Obama's Good Graces?Why are you guys even bothering to debate this. Obama’s new regulations will never see the light of day. If they do it may be after the next crises very watered down and the regulators will have no power to implement then. Business as usual the US way. The lobbist will see to this!
- Posted by gdHedge funds and private equity firms did not cause the financial crisis. Many were hurt by it, a few got destroyed.
Citibank was regulated by the Fed, Lehman was regulated by the SEC, and AIG was regulated by the states of NY and CT, the office of Thrift Supervision, and by the UK FSA.
So tell me, how did these regulators do?
We need smart and consistent regulation, not more of it.
http://www.SoberLook.com
- Posted by Walter Kurtz[...] escaped much in the way of additional regulation in the administration’s proposed legislation. Under the Obama plan hedge funds would be required to register with the SEC as investment advisers and provide [...]
- Posted by The curious case of hedge funds in the financial crisis Abnormal Returns