Regulatory watch list for 2012: the shifting landscape for hedge funds and other private funds

Abstract

PurposeThe purpose of this paper is to explain legislative and regulatory changes and related developments that will be of interest to hedge funds and other private funds as they traverse the shifting regulatory landscape in 2012.Design/methodology/approachThe paper provides a general overview of the new regulatory regime that the Dodd‐Frank Act imposes on over‐the‐counter (OTC) derivatives; describes the rescission of a regulatory exclusion from the commodity pool operator (CPO) definition that was previously available to registered investment companies and the repeal of an exemption from CPO registration requirements for operators of funds whose shares are exempt from registration under the Securities Act of 1933; discusses proposed changes to CPO and commodity trading advisor (CTA) compliance requirements; discusses Dodd‐Frank Act changes to existing securities laws and regulations, including with respect to large trader reporting and investment advisers; highlights some of the concerns raised by MF Global, Inc.’s collapse; and describes recent tax law developments.FindingsThe paper reveals that the Dodd‐Frank Act significantly alters the space within which hedge funds and other private funds currently operate.Practical implicationsWhereas the majority of the regulations to implement the Dodd‐Frank Act have yet to become effective, federal regulators are working diligently to implement their mandates and hedge funds and other private funds should begin preparing to comply with the new Dodd‐Frank Act requirements now.Originality/valueThe paper provides expert guidance by experienced securities, derivatives and tax lawyers.