Independent – London-based hedge fund managers are facing a regulatory clampdown from both British and American watchdogs.
The Financial Services Authority will next month detail where it is going on regulating hedge funds and their managers, after a six-month consultation first revealed in The Independent on Sunday.
The regulator has set up a special hedge-fund unit, led by Andrew Shrimpton, which is looking at how it can better control the £500bn industry operating out of London. Most hedge funds are registered offshore but are run in major financial centres, such as London, New York or Chicago. The FSA has been worried about the trading techniques used by some of the funds.
A report into allegations of market abuse by GLG, one of London’s largest funds with $13bn (£7.5bn) invested, is with the FSA. Philip Jabre, a director of GLG who was at the centre of the allegations, recently stepped down from the fund. Reports suggest the FSA may fine GLG and suspend Mr Jabre from working in the City.
“The FSA believes many hedge funds are testing the borderlines of market abuse, which is why it is interesting to see what is done in the GLG case,” said Angela Hayes, a partner at lawyers Lawrence Graham.
At the same time, London hedge fund managers are being forced to register with the US Securities and Exchange Commission after a change to American law. The 1940 Investment Advisors Act was extended to hedge funds with 14 or more US investors, who must now register with the SEC. So far, around 100 London managers have done so.
