WEST PALM BEACH, FL (www.hedgeco.net) – US based hedge fund managers continues to nervously await the full implementation of the new SEC laws early next year. But the next phase of the new regulationwill begin in March 2005, when hedge fund managers must prove that their investors actually meet the SEC\u00c3\u00af\u00c2\u00bf\u00c2\u00bds definition of \u00c3\u00af\u00c2\u00bf\u00c2\u00bdrich investors\u00c3\u00af\u00c2\u00bf\u00c2\u00bd.<\/p>\n
Traditionally Hedge funds managers have avoided the regulatory oversight of the SEC, but the introduction of new laws last year have made it mandatory that managers must now prove that they are complying with such laws in order to charge fees.<\/p>\n
Beginning in March 2005, the SEC will enforce one of the statutes of the new law, by making sure through mandatory audits that hedge fund investors actually meets the \u00c3\u00af\u00c2\u00bf\u00c2\u00bdqualified investors\u00c3\u00af\u00c2\u00bf\u00c2\u00bd provision. Hedge fund managers will take at least $750,000 from investors while on the other hand they must prove that those investors are worth at least $1.5 million, before they can charge them incentive fees. David Hearth, a partner at law firm Paul, Hastings, Janofsky & Walker LLP, said, “It is a modification and it ties into the new hedge fund adviser rule.”<\/p>\n
In the past, some managers used the family and friends loophole to charge investment minimums of about $250,000, which falls by far below the $1 million charged by bigger funds. George Mazin, a partner at law firm Dechert LLP, said, “This will raise the bar slightly for hedge funds, but it has been in place for other investment managers for some time.\u00c3\u00af\u00c2\u00bf\u00c2\u00bd Mazin, however noted that such requirement is not a big deal because fund managers can always waive performance fees for non-qualified investors. He said, “Many funds charge only a management fee to select clients and they can continue to do that.\u00c3\u00af\u00c2\u00bf\u00c2\u00bd<\/p>\n
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net<\/p>\n
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