The Dodd-Frank financial reform may not have set out to target hedge funds specifically, but the effect on George Soros's fund is the same as if it had, The Wall Street Journal reports.
Because Dodd-Frank dictates that hedge funds must register with the Securities and Exchange Commission if they accept cash from non-family investors, Soros has closed his hedge fund to outside investors.
"We have relied until now on other exemptions from registration which allowed outside shareholders whose interests aligned with those of the family investors to remain invested in Quantum," Soros’s sons, who now manage the Quantum Group of Funds, wrote in a note to investors.
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"As those other exemptions are no longer available under the new regulations, SFM [Soros Fund Management] will now complete the transition to a family office that it began eleven years ago," returning “the relatively small amount of nonqualifying capital to outside investors before the registration deadline, most likely at year end.”
Dealbook reports that, of the roughly $26 billion the Soros fund manages, less than $1 billion belongs to outside investors.
Over the past year, several other prominent hedge fund managers — including former Soros CIO Stanley Druckenmiller and Carl Icahn — have elected to close their funds to outside investors.
According to The Christian Science Monitor, attempts at hedge fund regulation are backfiring, causing some of the largest money managers in the world to retreat even further from regulatory view.
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