Client Alert
| February 11, 2009
Proposed Hedge Fund Transparency Act
On January 29, 2009, Senators Charles Grassley, R-Iowa and Carl Levin, D-Michigan introduced to the Senate the Hedge Fund Transparency Act (the "HFTA"). The stated purpose of the bill is to subject hedge funds to limited regulation by the U.S. Securities and Exchange Commission (the "SEC"). However, notwithstanding its title, the HFTA is not limited to hedge funds. If the HFTA is enacted as proposed, any entity with $50 million or more in assets that currently relies on Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act of 1940 (the "1940 Act") to avoid registration as an investment company (“private investment companies”) would be required to register with the SEC and comply with certain other requirements specified in the HFTA. While the HFTA would subject private investment companies to significantly less extensive regulation than the 1940 Act imposes on other registered investment companies, if the HFTA is enacted as proposed, private investment companies’ regulatory obligations would increase substantially.
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This memorandum is intended only as a general discussion of these issues. It is not considered to be legal advice. We would be pleased to provide additional details or advice about specific situations. For additional information on this important topic, please feel free to call upon your Dewey & LeBoeuf relationship partner. No part of this publication may be reproduced, in whole or in part, in any form, without our prior written consent.
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