Hedge fund managers bridle under new regs

By Craig M. Douglas
Boston Business Journal
February 19, 2006

New disclosure rules handed down by the Securities and Exchange Commission are rippling through Boston's investment community, triggering confusion and even some animosity among local hedge fund managers who say the regulations miss the mark.

SEC officials say 962 hedge fund managers have registered with the government since it amended the Investment Advisors Act of 1940. The measure, which requires hedge fund managers to disclose certain information about their operations, aims to protect investors and stabilize securities markets by creating better tracking mechanisms for the hedge fund sector.
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That said, it is still unclear whether the SEC's changes will be permanent: The new rules are being challenged in court by New York hedge fund Bulldog Investors, which is suing the SEC for overstepping its regulatory authority.

A U.S. appeals court in Washington, D.C., is expected to decide on that case shortly, and legal experts say a Bulldog win would ultimately quash the SEC's new decree. The disclosure rules have been in effect since Feb. 1.

"Frankly, it's not quite over yet," said Derek Meisner, a former branch chief at the SEC's Division of Enforcement and a law partner with Kirkpatrick & Lockhart Nicholson Graham in Boston. "There's more than an insignificant chance that the (SEC's) ruling could be overturned"...