Financial Regulatory Reform - Hedge Fund and Private Equity Provisions

The Administration’s sweeping recommendations for financial regulatory reform, issued June 17, 2009, impose only limited requirements on hedge and private equity funds. Above a de minimus threshold, hedge fund and PE managers will be required to register with the SEC under the Investment Advisors Act. The Administration’s recommendations do not impose any explicit capital, leverage or similar financial requirements on hedge funds or PE firms. On the other hand, an interagency committee will name financial holding companies whose size or other factors make them systemically significant. Thus, it is at least imaginable that a particularly large hedge fund might be designated. The effect of being named a significant financial holding company is to be subject to “robust”, “strict” supervision.