Hedge Funds and Private Equity
Since the collapse and subsequent bailout of Long-Term Capital Management in 1998, Congress, the SEC, and other policymakers have argued that advisers to private funds should be required to register with a regulatory body and be subject to monitoring on an ongoing basis. Hedge fund trading of complex instruments such as credit default swaps and widespread short-selling during periods of market distress have placed the industry under considerable public scrutiny. Traditional private equity funds, unlike hedge funds, do not normally trade complex financial instruments and are not nearly as interconnected with the financial system, but their activities are sometimes misunderstood and equated with those undertaken by hedge funds. The recent crisis has provided those intent on regulating hedge fund and private equity advisers with the opportunity to do so through the Private Fund Investment Advisers Registration Act of 2010.
- Disclosure and Examination Requirements (§ 404)
- Elimination of the Private Adviser Exemption and Modification of the Intrastate Adviser Exemption (§§ 102 – 403)
- Mandatory Threshold for Registration Increased (§ 410)
- New Exemptions from Registration
- Short-Selling and Accredited Investors (§ 413 & § 417)