WEST PALM BEACH, FL (www.hedgeco.net) – The new SEC Hedge Fund law provides a loophole to Hedge Fund managers who do not want to register their activities with the agency. Such managers must placetheir client\u00c3\u00af\u00c2\u00bf\u00c2\u00bds assets into a two-year mandatory lock-up period. However it remains uncertain if many hedge fund managers may do just that.<\/p>\n
According to Section 3 of the Investment Company Act of 1940, there are additional loophole exemptions, which may be used to avoid registering with the SEC. One loophole is 3-c3, which offers exemptions to banks and insurance company pooled funds from registering with the SEC. Robert Rosenblum of law firm Kirkpatrick & Lockhart however believes such a loophole is simplistic.<\/p>\n
Other loopholes may emanate from the definition of an \u00c3\u00af\u00c2\u00bf\u00c2\u00bdInvestment Company\u00c3\u00af\u00c2\u00bf\u00c2\u00bd. According to the SEC, futures are not securities, so either ACT of 1940 registrations, or the new IAA rule would not cover a hedge fund trading solely in futures. Under such scenario, portions of the assets held by those funds could be devoted to spot markets because the SEC law specifies that; \u00c3\u00af\u00c2\u00bf\u00c2\u00bda company may trade in securities up to 40% of assets without being a registered investment company.\u00c3\u00af\u00c2\u00bf\u00c2\u00bd Hedge funds which trade on mortgages or taking title to real estate could also use Section 3-c5 to apply for SEC exemption.<\/p>\n
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net<\/p>\n
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