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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (45316)	1/26/2006 5:31:50 PM
From: shades	Read Replies (1) \| Respond to of 116555

hehe - what is the deal Knighty? Why no rush? Someone tried to put me onto some offshore stuff - but I feel there is already too much corruption with my friends down the block - hehe =DJ No Rush Of Hedge Funds To Register Ahead Of SEC Deadline . By Marietta Cauchi OF DOW JONES NEWSWIRES NEW YORK (Dow Jones)- The anticipated flood of hedge fund advisors wanting to register ahead of the SEC deadline hasn't materialized. From Feb. 1 all hedge fund advisors managing assets in excess of $30 million and with more than 14 individual investors have to be registered with the Securities & Exchange Commission. Managers with between $25 million and $30 million under management can register voluntarily. With an estimated 8,661 hedge funds worldwide industry commentators had been predicting some several thousand applications. However figures from the SEC this week show that just 465 hedge fund advisors have registered since the beginning of January 2005 with a further 348 applications yet to be processed. "Our own high end estimate was between 1,000 and 1,200 - there may be additional advisors who aren't signing up and adopting a 'wait and see' attitude," SEC spokesman John Nestor said in an interview. Others say that many of the larger hedge funds had already registered - in many cases to enable them to take unlimited amounts of pension plan money - while those that hadn't are anxious to avoid the costs of compliance. The largest cost forecast by the industry is the hiring of a chief compliance officer. In addition many hedge funds don't have the technology and procedures to comply with such basics as document retention. "Taking into account the chunky salary likely to be demanded by a compliance officer - many highly-paid lawyers and accountants are switching to hedge funds - the cost could be anywhere between $500,000 and $1 million," says Iain McMurdo, partner in the Cayman Islands office of law firm Walkers. McMurdo, who advises hedge fund managers and private equity firms, says he has seen a number of investment managers who typically manage an onshore fund and run an offshore mirror fund introducing 25 month lock-ups to avoid registration. Under the new SEC rule, funds that don't allow investors to take out money within a two-year period are exempt from registration. Traditionally rapid traders, hedge funds have been getting into longer-term investments as returns have become harder to come by with a surplus of capital and less volatile markets. The added attraction of avoiding registration has increased the imposition of longer lock-up periods - and with an increasingly difficult fund-raising environment many hedge fund managers will be happy with money raised and captive in lock-ups. In addition to regular reviews by the SEC, registration is also more likely to attract unscheduled visits by the regulator - possibly at the request of a disgruntled employee, investor or competitor. "The ongoing risk of an SEC sweep which could cause reputational as well as financial damage - even if an investigation fails to uncover any wrongdoing - is also a deterrent to registration," adds McMurdo. Many hedge fund managers based outside the U.S. have also chosen to avoid registration - by only taking money from offshore, keeping down the number of U.S. investors they have or not pursuing instititional money, says David Goldstein, a partner in law firm White & Case LLP's investment-funds group in New York. Non-U.S. based hedge fund managers with more than 15 U.S. clients are required to be registered whatever the size of assets under management. "However, high net worth individuals in the U.S. are less likely to ask questions than pension funds and endowments," says Goldstein. Meanwhile, the growth of the hedge fund industry itself is slowing. The latest figures from Chicago-based Hedge Fund Research showed an outflow of $824 million in the fourth quarter of 2005, the first quarterly decline in more than 10 years. And for the year, hedge funds attracted just under $47 billion in new assets, caompared with 2004's total of $73.6 billion and a massive $972.6 billion in 2003. "The SEC numbers are a low show - and it's all to the detriment of U.S. investors who will be losing an investment opportunity and in other cases losing U.S. legal protection," says Goldstein.