Doug Mills/The New York TimesAfter signing an overhaul of the financial system in 2010, President Obama shared the moment with Paul A. Volcker, a former Federal Reserve chairman.The Dodd-Frank law is not exactly popular among financial services professionals, many of whom consider the new legislation too onerous and restrictive.
But, at least according to a recent study, one segment of the industry is pleased with the new reality: hedge funds.
These secretive partnerships, which have long avoided outside oversight, were recently brought into the regulatory fold with the legislation. The law requires those with more than $150 million in assets to register with the Securities and Exchange Commission.
The study, conducted by the business school at Hofstra University and the accounting firm EisnerAmper, found most hedge funds felt that registration was the cost of doing business and believed that investors felt safer as a result of it.
Registration requires hedge funds to disclose information about their business operations, including who they bank with, who their auditor is and what types of investment strategies they deploy. Such information has in the past been quite difficult to obtain from these firms.
The findings come from a relatively small slice of the industry — just 41 hedge funds and asset managers. But the researchers found the responses to be pretty consistent, especially when broken down between large and small hedge funds.
“The regulatory landscape for hedge funds in 2012 is dramatically different from what came before as Dodd-Frank’s rules become final,” Nicholas Tsafos, a partner at EisnerAmper, said in a statement. “While the large firms are largely embracing the changes, they are threatening to smaller hedge funds as start-up costs increase.”