Legal Framework for Hedge Fund Regulation
2 pages
English

Legal Framework for Hedge Fund Regulation

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2 pages
English
Le téléchargement nécessite un accès à la bibliothèque YouScribe
Tout savoir sur nos offres

Description

legal framework for hedge fund A high net worth participant (or even a qualified purchaser) as defined by Securities Exchange Commission (SEC) is undoubtedly an individual with the asset base of $ 1 million dollars plus an institution or perhaps a fund or maybe a trust by having an asset base of $ 5 million.

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Publié le 31 mars 2016
Nombre de lectures 0
Licence : En savoir +
Paternité, partage des conditions initiales à l'identique
Langue English

Extrait

legal framework for hedge fundA high net worth participant (or even a qualified purchaser) as defined by Securities Exchange Commission (SEC) is undoubtedly an individual with the asset base of $ 1 million dollars plus an institution or perhaps a fund or maybe a trust by having an asset base of $ 5 million. Apart from this statutory limit, investment in hedge funds is essentially the preserve of sophisticated investors who hold the required knowledge to evaluate the danger connected to buying this asset class. Though the original intent behind hedge funds was to purchase equity securities and apply leverage and short selling to "hedge" the portfolio's contact with movements of the equity market, this remit has altered. Today, hedge fund advisers use labyrinthine investment strategies and techniques to enhance investor returns and several are extremely active within the trading of securities, representing between nearly 20% of equity trading volume in america securities market. Ben Axler of Spruce Point CapitalRegulating the Hedge Funds Probably the most clamorous reasons cited through the votaries of regulating the Hedge Fund marketplace is the incredible growth and development of hedge funds and the increased influence and power that hedge funds are experiencing in the stock markets. The industry is attacked for being secretive, engaged in risky behavior and capable of unduly influencing global economies and corporate activities. A rise in fraud cases involving hedge fund advisers, juxtaposing with an increase in exposure of unsophisticated small investors on the risks of hedge fund investing has enticed the policymakers and regulators to create the hedge fund industry under greater scrutiny. Hedge Funds were largely held responsible to the South East Asian Economic crises during the late 1990s, the failure of the long run Capital Management Fund in the usa in 1990s and it is subsequent $ 3.5 billion bailout via the Federal Reserve Bank in order to avoid the cascading collapse of global financial markets; and the current surge from the Bombay Stock Exchange SENSEX, which even surprised the Indian Finance Minister regarding comprehend the reasons for this sort of surge, creates a disagreement that some form of regulation must be encouraged for hedge Funds. We have witnessed studies into the chance of direct regulation undertaken over the last years by such bodies since the Basel committee on banking supervision, the International Organization of Securities Commissioners and possibly most significantly, the US president's working group on stock markets. However, no major regulatory body has advocated direct hedge fund regulation. Self Regulations: Despite the fact that there is not any statutory obligation to produce a public disclosure, hedge funds provide their potential investor using a private placement memorandum that discloses details about the overview and investment strategies of the hedge fund. The memorandum also
provides the adviser along with the maximum flexibility when deciding on, shifting and modifying its strategies and arms him with broad discretion in valuing hedge fund's assets. Hedge Fund investors generally receive some ongoing performance information, risk analysis and portfolio profiles from other hedge fund advisors. Most hedge funds retain an auditor to conduct an impartial audit which if certified is ready using generally accepted accounting principles (GAAP). Market competition has generated a growing demand by the investors for business-unit level SAS 70 assessment (Statement on Auditing Standards No.70 Service Organizations,) by reputed firms.
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