Client Alert

SEC Proposes New Rule to Register Hedge Fund Advisers

July 31, 2004

Investment Management Practice Group

The Securities and Exchange Commission has proposed Rule 203(b)(3)-2 under the Investment Advisers Act of 1940 in order to require advisers to hedge funds with at least $25 million in assets under management to register as investment advisers under the Act. The SEC cited as reasons for the Rule the growing amount of assets invested in hedge funds, the increasing significance of hedge funds in the US securities markets, the rise in the number of hedge fund fraud enforcement cases and the increased exposure of smaller investors in hedge funds.

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Investment Management

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