Opinion

That bonus could get you investigated

by

If it looks like a broker-dealer and it acts like a broker-dealer, is it still just a hedge fund?

 
    

By Jacob Navon

Managers of alternatives firms may be ignoring an unexpected regulatory pitfall to their potential detriment. In a talk to the American Bar Association earlier this year, David Blass, the U.S. Securities and Exchange Commission's chief counsel of the division of trading and markets, highlighted the question of whether marketers employed, or engaged, by hedge funds and private equity firms might come under the broker-dealer registration requirements of the Securities Exchange Act of 1934.

Registering as a broker-dealer can add onerous costs and layers of managerial complexity, as well as additional regulatory