Obama May Up Hedge Fund Pressure

Date: Monday, November 17, 2008
Author: Karla L. Yeh, Reporter, Markets Media Online.com

Senior hedge fund managers expect the new presidential administration to increase regulation of their industry and add operational costs, according to a survey by certified public accountant firm Rothstein Kass.

The survey, called “A New Regime: The Regulatory Climate for Hedge Funds,” said almost all of the managers surveyed expect negative change, including more regulation, higher costs, but do not expect increased fund closures or fewer start-ups.

Rothstein Kass compiled research from 313 U.S.-based hedge fund senior partners. Approximately 70 percent of survey participants reported assets under management between $100 million and $750 million while 30 percent of surveyed firms reported more than $750 million in assets under management.

“The election's focus on the economy left many with the impression that regulatory reform will be a priority for the new regime. While the scope of these efforts is not yet defined, it is apparent that the hedge fund industry believes that regulatory action is on the horizon,” said Howard Altman, co-managing principal of Rothstein Kass.

"Though hedge fund managers readily acknowledge that a more restrictive regulatory environment looms, the industry seems well-positioned to meet the demands of increased compliance. Despite the fact that nearly 84 percent of participants believe that compliance costs will make funds more costly to operate, fewer than seven percent expect that this will lead to increased costs to investors,” he added.

New York-based Rothstein Kass provides audit, tax, accounting and consulting services to hedge funds, fund of funds, private equity funds, broker dealers and registered investment advisors. Russ Alan Prince, a counselor on private wealth, and Hannah Shaw Grove, an expert on behaviors and finances of wealthy individuals, conducted the research for the survey.