Reuters – Hedge funds are now beyond the reach of U.S. financial regulators, but they are in no hurry to terminate their registrations because it might worry clients and too many uncertaintiesremain, according to industry experts.
In June a federal court struck down a five-month-old Securities and Exchange Commission rule that forced most hedge funds to register with the agency and gave SEC auditors regular access to the funds’ books.
In early August regulators said they would not appeal the decision, signaling to the $1.2 trillion (640 billion pounds) industry that fund managers could effectively tear up their registration papers and stop following a new set of guidelines aimed at curbing fraud.
Fund managers, who had long bristled at regulators’ efforts to watch the often secretive but successful industry more closely, predicted hundreds of funds would pull out fast.
But in the eight weeks since the rule was tossed out, only 39 funds out of 2,540 that are registered have filed papers to deregister, SEC spokesman John Nester said.
“Right now, it seems that the industry is taking a wait-and-see approach,” said Jedd Wider, a partner who advises hedge funds at the law firm Morgan Lewis, explaining that managers don’t want to move too quickly for a variety of reasons.
