Hedge fund industry welcomes change to US registration

Hedge fund industry practitioners have welcomed the news US market watchdog the Securities and Exchange Commission is to defer the deadline to register with it until the first quarter of next year.

Originally the SEC had mandated registration, under Washington’s Dodd-Frank Reform Act, by 21 July.

Andrew Shrimpton, a member in regulatory compliance at business advisors Kinetic Partners, said: “The challenges facing asset managers in ensuring compliance with the Dodd Frank Reform Act are very time-sensitive.

“We believe this will help avoid both unnecessary and rushed registrations for around 500 UK-based asset managers including managers of many hedge and private equity funds currently working on their registrations.”

He added it would give more time to those managers hoping to be exempt from registration, based on final rules once the SEC finishes implementing rulemaking by 21 July.

Those exempt include some foreign managers, investment advisers with under $25m and managers with assets under $150m who solely advise private funds, not investor-driven structures.

Citi found last month 82 of 220 US funds with $1bn or more had not yet registered.

The consequences of not registering remain unclear, said Sandy Kaul, head of business advisory services for Citi Prime Finance.

He said family offices are exempt as long as they have no clients other than family clients, so some funds “might decide to give back investors’ money in order to qualify as a family office,” but they would then have to change how they ran.

David Walker

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