All About Alpha – The SEC’s 2005 attempt to regulate hedge funds using the Advisers Act is now the stuff of hedge fund legend. Still smarting from the LTCM debacle over half a decade earlier, the Commission wanted to require hedge funds to register and report regulatory to authorities. Until then (and, to the Commission’s chagrin, subsequently) hedge funds relied on an exemption available to advisers with fewer than 15 “clients”.
But when the Advisers Act was created, an “adviser” was generally considered to be a provider of bespoke services to individual investors, not to a collective of investors (a “fund”). So a hedge fund adviser with, say, one hedge fund, was (and is) only considered to have one client.
