Wednesday, January 18, 2012

Hedge Funds are About to Undress

Share of financial sector in gross domestic pr...Image via WikipediaHedge Funds are About to Undress:

While we do not know the consequences of the new regulations, is expecting a contraction in the hedge fund world as a result of the new rules"

"The July 21 deadline for the hedge funds to register required by the one year anniversary of the Dodd-Frank bill is fast approaching, and the industry is roiling with turmoil. The net result for the rest of us could be shrinking market liquidity and falling asset prices as hundreds of funds shut down or move overseas rather than meet the new, onerous disclosure requirements and the vastly increased legal liabilities they imply.

The new regulations raise the level of disclosure virtually to the same level already demanded by your garden variety, plain vanilla mutual fund. Details will have to be released about assets under management, performance, strategy, risk management procedures, custody, brokerage relationships, soft dollar arrangements, commission discounts and kickbacks, fees, compensation of the managers, types of clients, conflicts of interest, and of course, their largest holding. All of this information must be provided in plain English, filed with the SEC, where it will be available online to the public."

For a good "cheat sheet on the Dodd-Frank bill click here.
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