Hedge Fund - Regulation

Regulation

A range of regulatory methods are used to provide oversight of hedge funds worldwide. According to a report by the International Organization of Securities Commissions, the most common tactic is the direct regulation of financial advisers—including hedge fund managers, which is primarily intended to protect investors against fraud. Specific regulations differ by national, federal and state jurisdiction. Historically, hedge funds have been exempted from certain registration and reporting requirements that apply to other investment companies, because in most jurisdictions regulation permits investments in hedge funds by only "qualified" investors who are able to make an informed decision about investment decisions without relying on regulatory oversight. In 2010, new regulations were passed in the US and European Union, which (among other changes) introduced new hedge fund reporting requirements. The Dodd-Frank Wall Street Reform Act was passed in the US in July 2010, and contains provisions which require hedge fund advisers with US$150 million or more in assets to register with the SEC. In November 2010, the EU Parliament passed the Alternative Investment Fund Managers Directive, which seeks to provide greater monitoring and control of alternative investment fund managers operating in the EU.