By Niki Natarajan
Regulation of the hedge fund industry is back on the drawing board after two years during which assets have halved, liquidity has dried up and frauds were exposed. While in the UK it is the management company that is regulated and registered irrespective of how much money a manager runs, in the US there seems to be a variety of permutations for registration.
In the US a few years ago it was considered "trendy" to register the management company, and those hedge funds that wanted to escape the radar screen simply locked up money for more than three years. However, many funds of funds went for full registration, including some of the fund structures themselves, to get assets from investors that would otherwise think twice about hedge funds.
Funds registered with the SEC under the 1940 Act in the US have never really taken off, only adding...