California drops proposal to register hedge funds


California’s Department of Corporations has withdrawn its controversial proposal to require registration of hedge funds with offices or clients in the state.

Introduced in September 2007, the proposal would have re-imposed mandatory registration after the U.S. Securities and Exchange Commission’s attempt to do so was invalidated in 2006 by the so-called Goldstein decision, in which the courts sided with a hedge fund manager who opposed the rule.

“My original proposal would have dealt with a gap in regulation of these types of investment advisers between the SEC and the State of California,” said Preston DuFauchard, sole Commissioner of