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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: shades who wrote (67129)	7/31/2006 9:02:40 AM
From: shades	Read Replies (1) \| Respond to of 110194

Hedge Funds Pump Up Ranks Of SEC-Registered Advisors . By Judith Burns Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--Hedge-fund managers accounted for much of the double-digit increase in the number of investment advisors registered with the Securities and Exchange Commission, a new study finds. Overall, the number of SEC-registered investment advisors is up nearly 20% from 2005, chiefly due to newly registered hedge-fund advisors, according to a survey to be released Monday by the Investment Adviser Association and National Regulatory Services. The number of advisors registering with the SEC had been growing by about 7% a year, but jumped 19.5% this year as more than 1,600 new registrants pushed the number of SEC-registered advisors above the 10,000 mark. At least half of the newly registered advisors advise at least one hedge fund, and hedge-fund advisors now account for nearly 24% of all SEC-registered advisors, the survey found. Hedge funds, which are lightly regulated investment vehicles intended for wealthy investors, came under tighter scrutiny this year, as the SEC required hedge-fund advisors to register with the federal agency by Feb. 1. The requirement was struck down by a federal appeals court this summer and the SEC has until Aug. 7 to appeal the ruling. On Tuesday, SEC Chairman Christopher Cox told Congress that the regulatory agency is still considering its options regarding hedge-fund oversight. As of April 7, more than 2,400 advisors managing hedge funds with an aggregate value of $2.4 trillion had registered with the SEC, according to the survey. The report said some of those advisors may choose to withdraw their registration - avoiding the need to file reports and undergo routine inspections - unless the SEC finds a way to maintain its oversight of them. Advisors who oversee at least $25 million of assets generally must register with the SEC, while those managing less are subject to state regulation. Congress split oversight in 1996, largely to lighten the SEC's burden and allow it to scrutinize advisors more often. Hedge-fund advisors previously were exempt from registering with the SEC, provided they didn't advertise their services to the general public and had fewer than 15 clients, counting the entire hedge fund as a single client. In a controversial move, the SEC changed the definition of client, saying that for purposes of registration, advisors now must count each individual hedge-fund investor as a client. According to the survey, more than two-thirds of registered advisors say their clients are high net-worth individuals. Some 54% advise pension plans, 46% advise corporations and 39% say their clients are charitable organizations. About 33% say they advise pooled-investment vehicles, a category that includes hedge funds, private-equity funds and venture-capital funds. Almost all registered advisors charge asset-based fees, and more than one-third said they charge performance-based fees, up from 26% in 2005, an increase the report attributes to the influx of hedge-fund advisors. Other findings: More than 600 non-U.S. advisors now are registered with the SEC, up 16.5% compared to 2005, and fully 85% of all SEC-registered investment advisors report having a clean disciplinary record, a slight improvement compared to 2005. The report is available online at www.investmentadviser.org and www.nrs-inc.com. IAA is a Washington, D.C.-based nonprofit that represents federally registered investment-advisory firms. National Regulatory Services, a SourceMedia division, provides consulting services to financial firms and investment advisors. -By Judith Burns, Dow Jones Newswires; 202-862-6692; Judith.Burns@dowjones.com (END) Dow Jones Newswires July 31, 2006 07:32 ET (11:32 GMT)