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Billion Dollar Income

Regulation of Hedge Funds


Regulation of Hedge Funds. What are the existing hedge fund regulations, and what are the implications?

Hedge funds have notorious amounts of freedom in pursuing whatever investment strategy they deem fit.

Hedge Fund Regulations

According to the SEC, Hedge funds are not mutual funds and, as such, are not subject to the numerous fund regulations that apply to mutual funds for the protection of investors – including:

  • Regulations requiring a certain degree of liquidity
  • Regulations requiring that mutual fund shares be redeemable at any time
  • Regulations protecting against conflicts of interest
  • Regulations to assure fairness in the pricing of fund shares, disclosure regulations
  • Regulations limiting the use of leverage, and more.

Implications of Low Hedge Fund Regulation

What this essentially means is that since hedge funds are not registered with the SEC, they are subject to very few regulatory controls and can seek to profit in all kinds of markets. Some may choose to pursue leveraging and other speculative investment practices, some of which may increase the risk of loss.


Return from Regulation of Hedge Funds to Hedge Fund Strategies

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