The Securities and Exchange Commission has ruled that most hedge funds must register with the organization, due to fraud and other drama in the industry. Some funds will be able to escape regulation with a designation as a “private fund.”
From the New York Times article: “The new rule applies only to those funds that allow investors to redeem their stakes within two years of buying them. The hedge funds in question are extending the so-called ‘lockup’ period to two years.” It seems to me that this is a big loophole — typical institutional investors like university endowments likely invest in the type of fund that will be exempt from the ruling.
More on Consumerism Commentary about hedge funds:
- A Hedge-Like Fund for the Rest of Us
- Fewer Women in Hedge Funds
- Derivatives, the Future of Investing?
- Hedge Funds Open to Ordinary Investors
- Introduction to Hedge Funds
Updated February 7, 2012 and originally published January 30, 2006. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.