That may be a question nagging the Securities and Exchange Commission as the first, unofficial deadline of the agency’s new project to oversee the hedge fund industry is reached on Thursday.
Hedge funds have traditionally been lightly regulated investment pools for rich investors and institutions. But the industry has grown rapidly in recent years and there are now an estimated 8,000 funds overseeing more than $1 trillion. That encouraged the SEC to introduce new rules this year that require hedge fund advisers to register with the agency as investment advisers.
Managers have to sign up by Feb. 1, but because the SEC needs time to process documents, hedge funds need to file by Dec. 15 to make sure they’re registered. (Those that miss Thursday’s deadline need not despair: the agency suggested earlier this month that it would try to process registrations that arrive as late as Jan. 9.)
The SEC hopes the project will give it a better insight into the hedge fund world, help it detect and prevent fraud in the industry and monitor the increased availability of these funds to less-sophisticated investors.
But those goals – already the subject of much debate — may be compromised by the fact that many hedge funds aren’t signing up.
