Recommendations for Reality-Based Regulatory Reform for Hedge Funds and Other Private Pools of Capital

8 Pages Posted: 7 Feb 2010 Last revised: 11 Feb 2010

Date Written: October 21, 2009

Abstract

The author contends that current legislative proposals that would require hedge fund managers to register as Investment Advisers with the SEC are necessary but insufficient. In order to protect investors and reduce systemic risk, hedge fund operations and investment strategies should be subject to many of the substantive requirements of the Investment Company Act of 1940, the law governing mutual funds. These requirements might include leverage restrictions, asset valuation controls, limitations on self-dealing and related party transaction and fiduciary duties to fund investors. The justification for continued exemption from comprehensive regulation is based upon false premises, including the myth that only “sophisticated investors” have capital at risk through hedge funds. Taub dispels these “myths” and recommends reality-based regulatory reform.

Suggested Citation

Taub, Jennifer, Recommendations for Reality-Based Regulatory Reform for Hedge Funds and Other Private Pools of Capital (October 21, 2009). Available at SSRN: https://ssrn.com/abstract=1543862 or http://dx.doi.org/10.2139/ssrn.1543862

Jennifer Taub (Contact Author)

Vermont Law School ( email )

164 Chelsea Street
South Royalton, VT 05068

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