The Securities and Exchange Commission may have lost the court battle over its now-dead hedge fund registration rule, but it’s won more than it may have realized. According to Greenwich Associates, 27% of those registered expect to stay that way, mainly, says Greenwich’s Karan Sampson, director of hedge funds, because investors insist on registration and “flip-flopping” would “send the wrong message to those investors.” More than half of those polled are still not sure which way to go, and one in five have decided to skidaddle. The expense of compliance appears to be a major factor with respondents reporting a 15% increase in expenses associated with necessary staff, with between 25% and 30% more for consulting and legal fees (those hedge funds surveyed had an average of $2.9 billion AUM). Despite the victory against the federal rule, hedge funds appear to have little interest in challenging state legislation that controls them, with 85% of those asked saying they would not support industry groups to influence state HF policy. “It seems as if the hedge funds are still trying to stay below the radar,” says Sampson.
