The reform effort: Hedge funds and private equity funds

We've suggested that hedge fund and private equity funds have fared pretty well in the reform process leading up to Dodd-Frank. There will likely be some attempts to tax carried interest in the future, as tax issues in general continue to be controversial. But there are some new requirements. They are hardly onerous but worth mentioning.

For one thing, the Dodd-Frank Act eliminates the private advisor exemption, which many used to establish open-end hedge funds and unregistered private equity operations, notes Investment Advisor. A rundown by Kinetic notes that assets under management and the type of clients or investors they serve will determine which investment advisors have to register. Generally, U.S. advisors with $150 million or more will register with the SEC. Those with assets between $25 million and $150 million will register with states.

There are also provisions requiring a compliance manual and code of ethics, employee investment policies, a chief compliance officer, a compliance monitoring program, books and records archiving, risk assessment and annual compliance reviews, employee training, and disclosure of conflicts to investors.

For more:
- here's an article in Investment Advisor

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